Just a reminder: "The market is never wrong!"
That does not mean the market right... it does not mean the market is smart... it does not mean that the market has a clue about the economy... but, it is never wrong.
The market has decided it wants to rally higher and that would mean holding inverse ETFs is wrong because the trend has not just moved mildly higher (although today's 900 point swing from the top to the close is nothing to sneeze at), it has been a RYFO (Rip-Your-Face-Off) up rally this week.
Now, I know and you know that we will, sooner than later, find a cure or therapeutic solution to mitigate most of the COVID-19's scarier components (like death). And you and I know that the moment that this pandemic is more or less in the rear-view mirror, our economic shut-down will be over and we will all be back to work in our offices, going out to eat, standing in crowded lines, thronging to sports events and totally back to a thriving economy. Right?? I mean, that is what the market rally this week is telling us, isn't it? And, someone who should know, says that the market is never wrong. So, it is no wonder that the market is booming higher. We are hearing about the curve being flattened and all the homeless folk on intersection street corners are handing out thousand dollar bills by the handful.
Ok... my wife just peeked over my shoulder and said I'm getting a bit snarky and cynical. And, she would be right.
Here is the bottom-line as I see it... This rally is a false-hope rally. Really, really bad economic news is coming at us; some in this quarter and a LOT more in the next quarter. The government is desperately trying to keep the battery charged in our economic engine, but there will need to be fuel in the tank when it tries to restart the engine. That fuel would have to be a working, thriving supply-chain. I just do not see that happening with a throw of a switch. It will take time; perhaps a LOT of time for this country's economic engine to be firing on all cylinders. And, let's not forget that our economy is in shut-down mode and it may take us into a depression if we are not careful... and we are the strongest strongest economy in a world that is much worse off than we are.
The 200 dma is still one of the best indicators of where the market is headed and right now, that 200 dma is headed hard down and to the right. It is a bear trend in spite of the RYFO rally we got yesterday.
So, what am I doing in this market? Well, I am out of the ETF world right now. No bullish ETFs and no bearish ETFs. I bought one of my 'wannabuys' (very high-quality stocks that have been beaten to a pulp in the COVID-19 crash) today in Tactical Growth and threw in a couple of my 'ringers' (stocks that have the capability of doubling in share price in a very short period of time) into the ULTRA-MAX strategy. I'm still mostly in cash.
I'll be watching the market closely tomorrow morning... will the 'rally-with-no-place-to-go' continue? Or, will reality begin to creep back into the market. Could be the day-traders will say it's time to capture the profits from Monday and a fake sell-off occur. Either way, we need to see some serious conviction in trend one way or the other before I'm going to put much more capital in play. Right now, risk is simply too high until the market decides to pick a direction and stick to it for more than a day or two.
Enjoy your evening... call a family member that you can't go see right now... stay safe... stay optimistic... we will come out of this and will come out of it stronger; maybe different, but certainly stronger.