For two months how I have been feverishly bullish on stocks, discussing new all-time highs by the middle of January in early December when very few thought such a move was possible.
When in mid-January we hit the 4850-4900 target I had outlined in the months prior, immediately my focus shifted to the NDX 18000 level as the next test for the market.
Then yesterday prior to today's CPI release, I said very specifically do not take Monday's reversal at 18000 lightly. That reversal was a very early recognition move by the market that was spot on at a very precise target. The very first signs of smoke where there is now a fire.
Here is the tweet from Monday:
Now as we sit with a significant reversal taking place at a resistance area that has been treacherous for the markets going back more than 14 years, I want to again emphasize that investors should not be dismissive of the bearish signals that are suddenly beginning to pile up.
While I expect the markets to be much higher by the middle of this year, from now into the end of Q1 has the potential to be a treacherous affair.
We all came into this year expecting rate cuts.
We all came into this year expecting to put the Fed on the back burner by spring, instead focusing on good earnings, a relatively healthy economy and several technology themes driving momentum.
Instead, after today, we are again mired in the Fed watch doldrums.
We have to mince what Powell says.
We have to pay attention to Fed governor speeches.
We have to wait for critical economic data before the market is given permission to choose a side.
Earnings are behind us and now this is what lies ahead until what is more than likely the late March Fed meeting.
Until then cash levels should be high.
This is a bull market so risk should not be shunned completely, but it needs to be managed.
We sold all of our growth names on Monday, with the exception of a single small-cap name.
Currently sitting on our largest cash position in months.
Content to wait this out, knowing that a buying opportunity will come, allowing for some outstanding gains if one chooses to be patient.
Let's see how this all shakes out before recommitting.
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