Since January 25th I got cold feet in the market, since then the stock market has been trading in a range, but recently the NASDAQ hit new highs.
Taking a look, at how things stand.
Nasdaq - the star of the week, new highs! Not by alot, but it finally has!
S&P 500 - Has been making new highs for a while.
DOW - new highs!
Russell 2000 - The party pooper, not making new highs, its the only major indicator that needs to hit new highs to get a unified bull market.
XLF - Financial sector - new highs!
XLU - Utilities - New Highs!
XLI - Industrial - New Highs!
On old player - Gold miners - GDX - Breaking up! I turned bearish around the GDX low of 31. Ironically, I called a GDX low back in August 2020 would go down to as low as 30. China has announced they are a buyer of Gold. This puts me at odds with gold, the anti-democracies such as China are going to try to undermine the Dollar power with Gold.
Bitcoin hit new highs, but over the weekend the US is starting to take a harder position on Bitcoin. Perhaps this will help gold.
The USD hit a recent low in January, but hit a local high on March 30th. The S&P 500 bottomed around March 25th and started to rebound. So if the USD starts to go up, I get concerned on the market may be sensitive to this.
US Bonds have been seeing interest rates go lower, TLT and other bonds have been rallying. I do think this is being caused by a 'trick' that the FED and the Federal government started in 2020. In 2020, the government issues 1.9 trillion of bonds, and put the cash into a 'savings' account. The government has announced they are going to start using that cash and NOT issue as many bonds. This will create a bond shortage, forcing a bond shortage, forcing rates down. So I think we will see rates continue to go down. I suspect this will keep the dollar from falling AND prevent rates from Rising.
If above is correct, we are likely entering into a final, epic, blow off top in the market. With interest rates going lower, free money from government programs, bitcoin (until recently) hitting new highs, rates going lower, gold strengthening, the dollar steady, we are going to see a stronger market.
So what's the catch? I can only see three to watch.
1) The dollar strength. If the dollar gets stronger (not a range), too much strength may cause the market to trade sideways or lower. (not a crash).
2) Leverage hitting a top. As I quoted on January 25th "I am tapping out", leverage is higher than ever before, but can it can keep going higher. We saw a crack in the system with ONE hedge fund failure with too much credit caused over 20 billion in losses. Stocks involved lost half their value.
3) An existential event. We had one last year, a pandemic, next we could have an international crisis involving China or some other event. Such an event could have a market panic kicked off.
I am having a very difficult time going hard-core long the market, but I will continue to hold bonds, some crypto, diversify to India, JEPI (7% dividend)
For lottery ticket plays:
HVBTF (3.5), its RIOT but with material earnings before Bitcoin exploded, so I think they may have a massive surprise to the upside.
COIN - I am not a big buyer, but I do have hope it will go up much more before a top.
JEPI - an ETF that pays a target of 7% dividend. It just keeps getting a higher value, a rock solid ETF.
Good luck!
