04-15-2020: Has Reality Set In? Doubtful...

Ok... the market (S&P 500) dropped a minuscule -2.2% today. You could easily throw that off to just a day of profit-taking after a solid up-day, yesterday. Tactical Growth, by the way, ended the day, down just 0.02% as ABT, AMZN, DOCU and QDEL had great gains today.


But, back to the minor sell-off today... Has the market come to grips with the fact that anecdotal news is beginning to surface that it is likely millions of small business will never reopen? No, it hasn't. Has the market come to realize the flattening the curve only keeps hospitals from getting overwhelmed with COVID-19 patients and does nothing to keep people from getting infected once they quit sheltering in place? Nope... don't think so. Has the market given any serious consideration that it might take many months before people will be able to get back out into crowds even with a mask on? And, that it is very difficult to eat at a restaurant while wearing a mask? Probably not. Has the market basically said, "We're not worried because the curve is flattening and Uncle Sugar is going to bail everyone out, so this pandemic is no big deal."? Seems like it.


But... you know what?


The market is never wrong. Blind, maybe. Short-sighted, at the very least. Overly optimistic. Totally in left field. But... never wrong. Why is it never wrong, you may (appropriately) ask? Because the market is the oxygen for stock prices. When the market drops significantly, all the oxygen is removed from stock prices and oxygen-starved stocks almost always drop in price. On the other hand, when there are strong up-trends in the market, stocks get an oxygen mask and the O2 is pumped into them and with that additional oxygen, stock prices move up (some would say they get inflated). Down-trending markets deflate stock prices. Up-trending market inflate stock prices. That is simply a matter of fact. Now, before you start sending me all the exceptions to that rule, I clearly understand some stocks (TSLA?) can move higher in almost any market, but that's an exception... not the norm.


Today, I only raised some stops... Sync'd some new client accounts with the portfolio models that they want to follow and watched as our portfolios significantly outperformed a down-trending market.


Now... what about tomorrow and the infamous "Jobs Numbers"... If the numbers are as bad tomorrow as they have been for the past couple of weeks, I suspect there won't be much of a dent put in this happy-go-lucky stock market. If there is any glimmer of lowering of the unemployment numbers, the market will likely take off again (assuming it does not get a serious dose of reality overnight). A much larger than expected number could put the market into another 2% to 3% sell-off. Not enough to believe that the recent lows will be retested. No, that won't happen until reality finally sets in (if it ever does... keep in mind, the Fed/Government (Uncle Sugar) is the giant money store that can dump unlimited amounts of money into the economy and keep reality at bay for a long, long time). btw... one of these days, Uncle Sugar is going to have to deal with the free money it is giving away right now... nothing is free... never. But, that's for another blog some time into the future...


So... with the "Incremental Rule" in play (watch my videos if you want to know about this rule), I am about 45% invested in TG, 40% invested in TM, 40% in Ultra, 40% in DIS (that's not Disney, btw), and 60% in Ultra-Max, which doesn't play by the Incremental Rule all that much. The rest of capital is in cash, waiting to see if the market wants to get right back into a wildly foolish bull-market trend and if it does, I may put a little more to work on the bullish side.


Remember... I know and you know... All God's children know... EXACTLY how long this bull market leg will last. Now, if you're a new reader of mine, you're going to be thinking this is impossible to know, but it isn't. This current bull trend will last EXACTLY until... wait for it... "IT DOESN'T". With that in mind, I keep my stops up as tight as I can and keep putting bullish trades in play, knowing that one of these days, this trend will end and it is at that time our stops will fire (hopefully after we've raised stops above basis), we will move from bullish to cash and if the trend continues to fall, we will move from cash to inverse ETFs.


Stay safe out there!!