Tired and Tattered

There is an old saying that bear markets don’t scare you out, they wear you out.  Well, if true, and it absolutely is, then this week its mission accomplished by the bears.  Everyone is worn out, frustrated, angry, and giving up on this market.  You can see it in the price action, read it on the message boards, and feel the angst when talking to colleagues.  This, in the long run, is a positive as it washes out the weak handed and allows for a reset of sorts for the market and valuations. Many have been clinging to the hope that the Fed won’t be as aggressive as once thought and would scale back the harsh verbiage as the markets showed their displeasure.  


Well, that’s not the case.  And as we noted in our quick missive a few weeks ago titled “When Doves Die” the Fed is hell-bent on fighting inflation and are now talking in terms of 50bps hikes at the next several meetings.  IRA’s and 410ks be damned.  This week’s sell-off in bonds and stocks has nothing to do with Ukraine or Covid.  It is the realization or acceptance that the Fed doesn’t have your back anymore.  This is not new news, but we are in the acceptance and pricing stage now.


We will have to wait until May 4th to get more details from the Fed.  Next week is the biggest week of earnings so far with Apple, Facebook, Amazon, and Google, amongst others.  We are not sure if great reports from them will even help much seeing how poorly Netflix and Tesla were treated after their releases.  But a few good reports with positive commentary could be what these dreary markets need to change its sentiment.  We shall see.


As for us. We had our two most profitable days of the month on Thursday and today. Our automated signaling program has been working well lately, and we were able to capture a nice chunk of this downside reversal which began late Wednesday. Also, crude and the yen have made for decent trading opportunities this month. We are however feeling the pain in cryptocurrency and the precious metals. Both of which trade very poorly – more so the metals.


It’s rough out there but no one said it was going to be fun or easy.  It’s neither. This is the hangover effect of the Fed’s big easy money party. A couple aspirin and some coffee aren’t going to suffice to deal with what’s ahead.  But, with discipline and a tactical approach, the opportunities will continue to present themselves on both sides of the ledger (long and short)


We will obviously have much more to say in our May Update – which will be out May 2nd.


Enjoy the weekend.