Bulls found wanting

The writing was on the card. I have been expressing my reservations on the rally which just seem weird with the divergences and a technical picture which does not seem to tally. And the noise from some of the 'experts' were ridiculous (seriously are they trying to drive up the market so that their big organisations can quietly unload their positions to the retailers? Just saying in jest and not to be taken seriously of course). When I refer to experts I am talking about mainstream experts who appear on financial news and websites from big organisations. Not all of them of course but some of them with some of the things they say just don't make sense. But who am I to say this. They are the experts!

I mean some were talking about a new bull market when economic indicators such as liquidity charts are still trending down with a FOMC that is still on a rate hiking mode. Honestly where is that liquidity to support the market coming from. A new credit cycle is not going to come soon with inflation high on the agenda. And consumers are not really in that great a shape looking forward. So where are the earnings to support the valuations going to come from? I wonder. 

Yes there is a chance of a new bull market. It is always a probability event. But my technical take on the market is that a C wave down for the final push of the bear market is more of a higher probability event than a new bull market now. Despite that I am still preparing for the lower probability event and if I see inklings that the market has decided to go on a bull run instead, I will flip immediately. Price action trumps indicators and economic data.

But as of now, I am in full defensive mode. In fact from late last week (Check earlier dated articles), I have been sharing my trading ideas and some might have laughed at me for closing out all my positions and shifting to cash but I have learnt hard lessons from the market. And one of them is it is better to miss a rally than to be stuck in a down spiral. Uptrends tend to be gentler but downtrends are usually steep and it is hard to steer out of the vortex. It is hard to keep emotions out and the recovery is mathematically more overwhelming. So I hope that helps many here to avoid FOMO. Caveat here is for the long term investors who are in for the long haul and might not care if the market goes up and down. You may ignore my comments and just stay vested. Time in the market is better than timing the market as some says! If in doubt please consult your financial advisor if need be.

At the moment, it looks like the market is preparing for one of those 'fall off the cliff' event. I might be wrong and be laughed at if the market keeps churning higher. But at least I can breath easy.

Thanks for reading my commentary!   

Stay safe! 😊