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The excerpt from last weekend's note is available here.
In this weekend's 16 page note we discuss:
- The prevalence of false sentiment and technical signals
- What true market sentiment actually reveals
- The striking relationship between gold/S&P 500 and what it says about market action this coming week
- A high probability and low probability market scenario for the week ahead
- A new earnings play
- What to expect from TSLA after earnings
- Another look at The Great Migration cycle
MARKET UPDATE
From the time this rally kicked off in March, there has been a weekly chorus of false sentiment, technical and economic indicators that have successfully done their duty in throwing investors off the scent of the market, rendering their capital useless as it sits parked in cash or hedged to the point of absurdity.
Some four months later, nothing has changed. Instead of seeking points of advantageous participation/allocation into this rally, an overwhelming majority of investors are looking at when it will end. Even the most bullish among us do not believe this rally can last for much longer than the next few months.
In the face of the greatest act of global central bank liquidity injections, fiscal stimulus packages and a massive transformation of society as we know it, investors are focused on the same data that has caused them perpetual misery since the 2009 lows. That is backward looking fundamental, macroeconomic data points. While the misery of the current state of affairs is very real, it is also the type of common sense, in your face data that the market uses to not just run, but sprint through the wall of worry it builds, as the market looks ahead to different data points that have yet to revealed through conventional measures. Put simply, what is obvious will always be obviously wrong.
The greatest threat that investors face in the current market is not missing the top, suffering through another repeat of the March virus crash. The greatest threat investors face has been and continues to be getting bearish early on a market that has done nothing other than demonstrate extreme consistency and momentum.
All it took was two 1% down weeks in the Nasdaq to bring out an army of top callers, bubble predictions and pessimists, calling for a steep retracement of the gains we have experienced since March.
All it took was two months of the S&P 500 moving sideways through a technical zone of turbulence that had a high probability of exerting exactly the type of messy action we have seen since early June in the S&P 500.
Investors are confusing a constructive digestion of gains with a market top.
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