Market back in CORRECTION…

Just a quick update- it looks like the Market might finally be capitulating to the reality of the COVID Re-Opening Consequences.  The Market has been extremely resilient to bad news over the past 8 weeks, but today’s action looks detrimental.

I don’t know if this pullback will hold but I’d like to see further deterioration so that I can put my cash reserves to work. [ Listen to a previous podcast where I discussed buying the dip to re-balance during a COVID recovery: https://www.wealthsteading.com/311 ]

Stay tuned…I plan to release more detailed analysis over the weekend.

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Taking some money off the table…

The S&P 500 has recovered to the previous highs of November 2019.  I’m concerned there might be a little too much re-opening exuberance right now.

So to lock in some profits, I sold the following positions:

  • BOTZ             Global X Robotics & Artificial Intelligence ETF
  • GOOGL         Alphabet
  • HACK            Cyber Security ETF
  • NVDA           NVIDIA
  • RYT                S&P 500 Equal Weight Technology ETF
  • UNH              United Health Group
  • XSD                Semiconductor ETF
  • YUMC           Yum China

I’m not worried about a catastrophic meltdown, but I am concerned the market has risen too fast and is ignoring some major uncertainties.  Namely:  Unemployment, China tensions, and the November Election.  You can listen to a brief 10 minute podcast explanation here:

If you’d like an even briefer explanation, here’s a 2 minute video:

Best returns and STAY SAFE !

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Suckers Rally coming to an END?

Has the seven week Relief Rally morphed into a Sucker’s Rally?  I hope so.  I’ve been waiting for another buying opportunity.

Today the S&P 500 was down 1.75%, not as bad as yesterday’s 2.05%; and unlike yesterday’s horrible close, today the index improved during the final minutes of trade. 

But things don’t look good.  Over the past three weeks the S&P 500 has been unable to retrace the April high, nor has it been able to get closer than 2% of its 200dma.  Today it also broke below its 20dma.

If the S&P 500 doesn’t find support at its 50dma (~2700) then it’s likely to drop to at least 2600.  At that point, it would even be probable that it could drop down to test the March 23 low (~2200). 

For long term investors, a drop to or below the 50dma would present an excellent buying opportunity.  As always, the exact bottom will be elusive and fruitless to try to pinpoint. 

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Bought Tyson Foods

The S&P 500 continues to ping pong around 2850. It has closed poorly for the past two sessions, especially today.

ALERT: today I purchased Tyson Foods TSN. It was a small position, no more than 3% of portfolio value…call me CHICKEN !!!

For a quick explanation of the rationale, please watch this short video: https://youtu.be/Ofe-N8b2EdQ

FYI- comments are always appreciated on the YouTube channel.  I may not have the opportunity to reply, but I do read them all.

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COVID Range Bound Recovery

The S&P 500 has been faltering for the past three sessions and is back near mid-April levels.  For now it’s range bound between the upper 200 day moving average and the lower 50dma.  Flip a coin to determine if the market will breakout or breakdown from here. 

Here’s my assessment of the current situation:

 MEDIA NARRATIVE

  • Second Wave of outbreaks as economies reopen
  • Declining corporate earnings
  • Depression level unemployment
  • Food shortages

TRUMP

  • Points blame at China and increases rhetoric about tariffs, reparations, and economic de-linking.

INVESTOR SENTIMENT

  • Investors develop amnesia about recent Stimulus intervention and demand more SPENDING.

What I find interesting is that today’s levels are similar to the peaks seen in Jan 2018, Sep 2018 & Jun 2019.  Back then the FEAR was Trade War, Tariffs, Impeachment…ultimately none of that static mattered and the Market went on to set new record highs.

I remain cynically hopeful for another dip, to be used as a long term buying opportunity.

FYI- watch for the next episode of the Wealthsteading Podcast, #312 will be informative & FUN !!!

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