Return always wants its risk payment.
Reminder, two weeks ago we published “The Pain Trade Is Higher”.
Key narratives:
Yields will most likely go a bit higher from here assisted by a bounce in USD
High beta will outperform low beta (doesn’t need to be just equities)
If you want exposure to rocks, it’s Silver>Rare Earth Metals>Gold in that order
TRIN Ratio is flashing exhaustion for the S&P, worth watching. Definition here
The S&P is in an extraordinarily tight spot @ 4300.
DO NOT CHASE THIS EQUITY RALLY. Your time to be a hero was 2 months ago, around the time of our "Opportunity in Chaos" newsletter.
When participating in markets, it’s important to remember that you are trading human behaviors and most unskilled “investors” regurgitate news like birds. When “investors” are calling an end to the bear market, remind yourself that most people are not informed market participants. Instead, most of them are market bag-holders and long beta only investors. Don’t cling on to the hope of recovering ALL the bear market losses in some portions of your equity portfolio. Unlikely. (see below)
Important level to watch on the S&P: 4300
S&P: TRIN Ratio is flashing signs of exhaustion in the rally. We err on the side of caution.
Any exposure to precious metals should be Long Silver/Short Gold.
Please reach out. We want to hear from you.
NOT INVESTMENT ADVICE