Don’t chase the herd or this rally.
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Understanding the current market:
It’s Energy/Commodities/Yields/Low-beta vs Equities/Growth/Bonds/High-beta
Commodities are looking ready to rally this week or into next.
When they do, equities and bonds will fall together.
The S&P 500 is exhausted, meanwhile new shorts are starting to get squeezed in energy.
We are back to our “Important Levels” from February. Beware behavioral bias, don’t chase this market now.
“Conversely, a TRIN value that dips below 0.50 may indicate an overbought market and that bullish sentiment is overheating.” - Investopedia Definition
Commodities are coming in hot again. A strong rally will cool down the equity market.
An important chart. Keep an eye on the yield curve.
Just chart your favorite ticker on top of SPHB/SPLV to see what beta regime it is in. We used Target as an example.
Johnson & Johnson (Low Beta). Notice the difference.
Return always wants its risk payment. NOT INVESTMENT ADVICE.