THE Bottom? “A” Bottom? Dead Rat Bounce?

Greetings from 38,000 feet as I head to Phoenix to cheer on the UCONN women in the Final Four. These events are always so much fun and you never know when it will be the last one, at least for a while.

Well, similar to Q1 2025, the last three months were “interesting” to say the least. This year it was Iran. Last year it was tariffs. Anyone want to guess what next year will bring?

A new month and new quarter begins today. April has historically shown better returns when it starts in a downtrend like today. That average is more than 2%.

The last day of the month and quarter saw a huge rally, making the bulls happy. Sorry to rain on the parade, but some of this may have been caused by expiring derivatives and window dressing. I certainly saw what looks like a lot of short covering. Additionally, for a 2-3% up day, the net number of stocks advancing was underwhelming at +1400. I would have expected hundreds higher. Also for such a high magnitude day, we did not see even 80% of the volume in stocks that went up.

I am sure folks are calling the low to be in. I don’t see it that way, at least not yet. I want more confirmation on the upside. Frankly, I would rather see this rally continue for a few days, fizzle and then one more trip to new lows in the coming few weeks.

The S&P 500 is below. The rally brought it right back to an area of congestion, making a bounce to 6700 on the unlikely side.

I mentioned that Russell 2000 the other day as a leading index. It certainly led on the upside yesterday and has more fuel left in the tank.

I mentioned the opportunity in gold recently, which I liked much better than silver. We bought the NUGT ETF a few days ago. While there should be more upside, I already started to prune the position as it looks like nothing more than a bounce so far.

As you can see below we have a flurry of activity this week. Hopefully, you can see a theme.

On Monday we bought CHD, NUGT, more MQQQ, more PANW and more DWAS. We sold XLC, some XME, some IYR, some CF and some SLB. On Tuesday we bought SDS, PCY, EMB, ECL, MKC, more CHD, more VEOEF, more HRL, more KMB, more SJM, more KHC, more KMB, more PANW, more CLX and more INTU. We sold some MQQQ, some NUGT, some UWM, some SLB, some XOM, some CVX, some XBI, some RSPS, some KRE, some CF, some MPC and some VZ.