Or buy into weakness, what’s it going to be?
Valuation looks like this:
Bull market looks like this:
Sentiment looks like this:
Leverage looks like this:
Solar cycle looks like this:
Economic surprises for all the main regions continue to wallow negative, and US earnings season is kicking off with 84% negative guidance.
Biotech, Social Media, the Russell 2000 and the Nasdaq all broke down as of the start of March, fulfilling negative divergences.
My calls for the Dow and Nikkei having topped out Dec 31 still stand. The Dow did everything it could to close above the 31 Dec high without actually achieving it this far.
No crash Monday or Tuesday of this week. Instead the market sold off into the full moon and then bounced intraday. So time to get bullish? No way! The waterfall declines are the last piece of the jigsaw. On the back of a 3 day rally we now look to earnings season to support the market, but earnings are projected to disappoint. We need a historic normalisation of earnings at this point to justify the valuations. The market could of course continue to range-trade rather than sell off, and so to the question as to whether it’s appropriate to sell into strength or buy into weakness here. For me it’s clear: the multi-angled case to be short is compelling and a rare opportunity. The rug may be pulled at any point, but will be pulled eventually. I’m short equities and still looking for opportunities to add short on the rips.