06-04-2020: Pulling UP or OUT?

Tomorrow is the big unemployment number day... 8:30 am EDT. Will the market be surprised? I doubt it. Will the number be big? Yes, but my guess is, the market will shrug it off. The market continues to look at the future through rose-colored glasses, and why shouldn't it? Uncle Sugar has not stopped the Sugar Train of more and more stimulus (actually this should be called life-support) money in the form of bond buy-outs (bail-outs, actually) by the Fed, another round of free money in the pipeline, and now even more sugar on the other side of the pond with the ECB not wanting to be left out of the sugar supply train.

I find it amusing (and more than a little disgusting) to see the politically-biased financial pundits trying to explain why the market continues to climb in spite of the horrid fundamental data and now, the riots. I am not going to comment on the riots since I have strong opinions about the causes, the participants and the reactions. I'll simply say that I suspect most of the rioters are not active investors in the market and the stores that are being looted make up a small microcosm of the all the stores run by public companies (the small mom/pop owners, on the other hand, are being crushed in those cities where vandalism is unchecked.) Plus, the market is so sold out on the assumptions that a vaccine is just around the corner and a V-shaped recovery is already in the cards; and, that means almost nothing can stop it from pushing share prices higher.

The market appears to be blind to the facts on the ground. That is why I have stops in place on every holding and the holdings in Tactical Growth are very, very tight. Even a mild sell-off tomorrow will take us to cash in most positions.

You simply cannot print money out of thin air and ignore the fact that such actions are only creating a bigger problem downstream. I don't believe that even if the economy were to return, instantly, to a pre-pandemic condition, there would not be a hefty price to pay for all of the so-called, stimulus.

I am not pulling out of this market. You can't make money in the market if you're sitting on the sidelines. But, I AM pulling my stops up closer to current prices in most of my portfolio strategies. I am leaving the stops fairly wide in my Aggressive Growth strategy. This strategy is designed to take on a bit more risk and it is important to let the holdings in this model, have room to fluctuate.

Tomorrow (at the close) is also a big day for the TMI (Total Market Index). If the market closes higher tomorrow than it did last Friday (likely at this point), then we will get our third TIP Warning, which throws the switch on the TIP Alert. (TIP means, "Trend Inflection point")

So what, you have every right to ask?

A bullish TIP Alert (expected to get at the close tomorrow) will signal it is time to have a full-on bullish investment bias. This is a quantitative decision and I don't mind telling you that I still 'feel' a 30% or more sell-off in this market is more likely than not, but I don't trade on feelings... I trade on the math and the math will likely produce a bullish investment bias for next week; and if that is the case, my goal will be to get us 100% invested across the board.

However... Regardless of how bullish the data are, I will keep stops as tight as possible, just in case the market finally wakes up and realizes that the emperor is buck naked.

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