In NFTRH 922 we discussed a plan where markets, including precious metals bounce/rally in the short-term, but enter a danger zone, beyond the short-term. This is due to gathering negative market signals, as illustrated.
But for the sake of clarity, I want to keep our original theme, which has been “to/through the mid-term elections” in view as the main theme, with any summer corrective activity being interim to that. This is for the stock market, not necessarily the precious metals.
Also, seeing some of the political crap emanating from the mouths of certain politicians, I see that the run up to the election has already started in the form of the bullshit olympics.
In other words, I see desperation on the part of certain figures to maintain congressional power in November. Okay, Speaker Johnson is who I am talking about. But that is incidental to our discussion.
As I was writing #922 I was weighing whether a correction sooner would provide enough time for a Fed-backed rebound that would have any positive effect for the Republicans prior to November. Then there is Trump and the Trump Accounts and usual pumping of the stock market. Also, there is the potential of positive (stimulative) effects of the big, beautiful spending bill to consider.
As an interlude, remember in 2024 we managed a bullish market with the “tin foil” idea that “they” (the Democrat “they”) were not going to let up on the stimulus with a ‘for all the marbles’ election that November? We turned out to be right about that. So I want to respect that same deal here.
At the very least, if there is a correction this summer, I want to pump the breaks on the idea it would be a strong one. As stated previously, I don’t want to play bear hero anyway. I did short SMH this morning, but that’s it. It is against portfolios with a bunch of long positions across several market sectors.
I am no huge conspiracy theorist, but I do wonder to what degree “they” may be able to to rig (or cajole, sooth-say) the markets into November. Will “they” allow enough of a summer correction for the Fed to back off its hawk pretense and flip dovish?
As may have bled through my writing, I don’t trust TreasSec Bessent because I think he is two things; 1) extremely smart and 2, agenda-driven (which is another way of saying “politician”). In other words, he is Janet Yellen in Republican drag.
Will “they” seek to make Trump look like the golden boy of the bull market as the big, beautiful bill starts to lift corporate America’s boats? As the effects of the war ease and a story of affordability starts to emerge? Other reasons?
Will there even be a correction? If so, are my caution indicators really pointing that far out, in November? We know that a VIX divergence can persist for months. The Equity Put/Call signal could also extend. Moderately over-bullish sentiment could become epic over-bullish before a serious correction ensues. Could that drag on into November?
It’s certainly too many question marks for me to try shorting beyond a trade here or there. Also, considering the existing view that the precious metals may continue bouncing and the stock market will not turn down until after the PMs have, I am not going to sell long positions so quickly either.
In that regard, I will continue taking some profits and looking for rotation plays while holding solid cash/equivalents (paying income) and taking the market week-by-week. As has been the case to this point.
Just some thoughts after watching the Speaker’s desperation today (he’s seeing Commies under every rock, or at least scaring elderly people watching Fox with that view) and weaving that into a theme that this (the coming election) is for all the marbles and powerful people are not fooling around here. Just as they were not in 2024 over on the other side of the aisle.
For now, I’m steady as she goes. Per NFTRH 922, short-term bull. Medium-term (this summer) is in question as I don’t have a handle on typical summer correction or unabated bull. Into November, at least. The real bear may come after. Let’s let the analysis dictate, not my guesses of today.
Bottom Line
The summary of the above is we are still on the bull, short-term, per the existing analysis. Beyond that a summer correction could well materialize. But if it does it could be routine. When I affix my tin foil hat and listen to the info wars going on out there, I also question whether “they” will allow even that. Gathering bearish indications could be delayed out to the post-election time frame.
I hate to introduce tin hat stuff into analysis. But the noise is growing and it is apparent that “they” (on both sides) are playing for keeps. I am going to manage cash closely, trade, take profits/limit losses and as long as the market remains bull trending, keep in line with its internal rotations. Same as has been the case to this point. As usual, I’ll be ready to manage risk at the drop of a hat as well. Indeed, profit taking, buying rotations and keeping strong cash is risk management.
However, 2024’s bull run into the presidential election could be a blueprint here, only with a different party in power.
