The market managed to hit an all-time high this week... well, at least the S&P 500 did. And for the last couple of days, it sorta 'looks' like it wants to take a breather... or maybe something else.
By definition, all bear markets begin at a market top. A 2.45% sell-off today in the S&P 500 is NOT enough of a fall to trigger my data into recommending a bearish investment bias. But, the Nasdaq is close to that kind of recommendation. The S&P 500 would have to drop another 200 points (about 5%) before it triggers a bearish investment bias.
Right now, depending on the portfolio, we are between 100% and 60% in cash and I while my data algos are beginning to twitch a little in the direction of a bearish sentiment, those signals are just not quite strong enough (yet) to cause me to start buying inverse ETFs.
Now... I know that 'some' of you (and you do know who you are) think today was a buying opportunity... this would be the Cramerites, of course. Then, there are 'some' of you that will drift off to sleep tonight, mumbling, "Why didn't Mike buy inverses yesterday!! He's going to wait too long and miss out on the big inverse gains."
I prefer that 'other' group... you know... the fact-based, trend-data group, who say, "That Mike Turner must have a crystal ball to know when to go to cash and get out of the way of a major sell-off today!" To that group, I say, "Thank you!", but we do not have a crystal ball. As Friday used to say, "Just the facts, ma'am!" The facts say to stay small and cautious until a real trend develops.
While this market is way overbought, according to the data, the current crop of inmates in the DC asylum believe that all we need is another couple trillion dollars of free money. They remind me (and, yes, Jim... I know I have used this analogy before, but we have a lot of new blog subscribers who may not have read all of those old blogs) of the bumper sticker I saw a long time ago when people still wrote checks... "I can't be overdrawn, I still have checks left in my checkbook!"
That's the mantra of the vote-buying politicians (on both sides)... keep printing money as long as they keep voting for me...
As a country, we have accumulated massive debt; we are still in a semi-lockdown mode; despite what Pontiff Powell says, you can't shut down the Keystone Pipeline and expect gasoline prices to stay at historically low prices... inflation is coming whether he thinks so or not; and I am not sure that the Pontiff and his new boss, former Fed Chair Yellen, can keep interest rates under control without massive amounts of inflation-growing monetary insertions.
But... I am a glass-half-full kind of guy... maybe all the market needed was a tiny opportunity to catch its breath before continuing its bubble-building-Reddit-induced, over valued (inflated?) market higher and higher and higher. I hope you don't mind if I stay in cash a while longer, just to be sure.
And, on a closing note... A BIG thank you to all of you who checked in on us during and after the great green energy collapse of the grand State of Texas power grid, natural gas grid and water grid. We do appreciate all the well wishes. It was tough, but we Texans are a tough breed (yes, I am a transplanted Texican) and have bounced back in fine form and are ready to grab the bull by the horns and start jumping ditches... as my dad use to say. I'm just glad we no longer have to carry buckets of snow into the bathrooms to melt and pour into the toilet tanks to flush. That was getting very old.