Investors Should Stay For The Crescendo To Come
On March 29th, I published a note titled “It's Time For Investors To Go All In On Equities.” The note started off by listing four contrary facts regarding the market that went against ingrained thinking that was significant to a degree not witnessed since the 2009 lows. The four contrary facts were as follows: 1. This is not a bear market 2. Poor economic performance over the next few months doesn't necessarily equate to poor stock market performance 3. Far from being irrelevant and out of ammunition, the Fed is more relevant than ever 4. There is no historical reference to this market. It is completely unique and unprecedented in scope. Future results will reflect this fact. Some 40 days later, after much reflection in the midst of a historic market rally, the ingrained nature of these thoughts is slowly dissipating, although not at the pace one would expect given the velocity of the upside. We've learned that this isn't a bear market at all, as the Nasdaq is close to making an all-time high. We've learned that poor economic data can cause shock and awe among the pundits while the market rallies. We've learned that the Fed is indeed very relevant, as they literally rescued the economy from the brink of a catastrophic meltdown. We are, however, yet to learn that there is no historic precedent for this market. This last point may be the most important as this year progresses. It's a point I want to focus on briefly here, as understanding this single fact may be the difference between a good and great year in the portfolios of investors. Over the past few months all of us have grown exhausted of hearing the word unprecedented. In fact, if you look at trends in the media, the use of the word unprecedented has grown exponentially in recent months. It should strike everyone as odd then when investors and analysts pull out historical comparisons of this market to any in recent or distant memory. This isn't 1929. This isn't 1987. This isn't 1998 or 2000. The only thing those periods have in common with 2020 is the market went down significantly, within a context of a historically relevant market panic. The impetus to make historical comparisons in the financial markets is driven by the desire to gain insight into what future events may hold for investors. It's only natural then that investors will turn to past to determine the future without thinking how the financial world has been turned on its ear, making all previous periods a moot point. A number of developments have taken place leading up...
Market Rinse Cycle Is On, Here’s The Move To Make As We Start The Week
It was bound to happen. Coming into last week I said that resistance for the Nasdaq was 8950. It was going to be the first real resistance point for a major market average since the March lows. The high for last week on the Nasdaq was 8957 and then this happened. While I was expecting some type of reaction, with Friday falling in the standard range of expectations, the futures action this Sunday is a little more than expected. We are now pushing the envelope of the 5% maximum peak to trough drawdown on the S&P. With that said, investors are extremely quick to jump off the bull train. Along the entire path of what I expect to be a much bigger rise than most are expecting, we will experience multiple days of downside volatility that will have investors expecting a replay of March. It won't come. That makes opportunities like this fleeting in that they provide a tight window for investors to take stock away from the overwhelming majority of weak hands and eager bears who make up the majority of market participants presently. The pullbacks will be steep and violent, but also short-lived in nature. With that said, a gap down opening on Monday morning is an opportunity to gain exposure, not cut and run, with large cap technology being the favorite target. We remain long leveraged ETFs from late March and wide variety of mid to large cap tech names. Zenolytics now offers Turning Points and ETF Pro premium service Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction, or which would subject T11 Capital Management LLC to any unintended registration requirements. Visitors to this site should not construe any discussion or information contained herein as personalized advice from T11 Capital Management LLC. Visitors should discuss the personal applicability of the specific products, services, strategies, or issues posted herein with...