This Probably STILL Isn't the Top
No bitcoin today. It has been pretty quiet over the past week. My views are unchanged.
To piggy back on something I wrote a couple of weeks ago, I still don’t think that we have seen the top in this cycle. I am open to the idea that I am wrong but I just don’t think that I am.
The latest installment for the “top callers” is this GME drama. But here is what 2020 taught me, much of what I thought I knew about markets has changed. Here is a great example. Three different people called or texted me during the last weekend in March, wondering if they should add money to the market. Now, I am not an adviser but I had my view that the trend was down and I generally look for some signs of stabilization before it makes sense to become aggressive. But, I remember thinking to myself: “three non-market people looking to invest? We are going much lower!” That was the Wall Street snob in me. It turns out that these three people called the low in the market. My thinking was “if retail wants to buy, I want to sell.” That was generally a great way to think for much of the market’s history. But I learned a lesson and have incorporated into my thinking. Dynamics may have shifted bit. People have much more information now than they did in the past. So I am not going to blindly think that a group of retail traders causing pain to a group of hedge funds has to be the top of the market.
Here is what I think. Things are getting better. It still doesn’t feel like it, but they are. Initial jobless claims fell for a second week in a row.
More importantly, continuing claims continue to fall.
People are getting back to work. At the same time, we are hopefully getting the logistics behind vaccine distribution under control. This line has to move up and to right much more quickly.
Consumer spending is back to pre-COVID levels (thanks to stimulus) according to Track The Recovery Dot Org.
Companies have easy hurdles to clear in the first and second quarters of 2021 compared to 2020.
The way I see it, is the same way that I have been seeing it. We are in a cyclical bull market. As long as the S&P 500 holds above 3,400, that is where we will remain.
The question is, who will lead? This is something I need to dig deeper on now. I had been looking for the cyclical value themes to outperform, and they have. Now there are some shifts playing out that need some watching.
PS: I know that I will be spending a lot of time in this presentation over the next few weeks.
As a reminder, nothing in this note should be considered investment advice. Thank you for reading and have a great weekend.