Happy Memorial Day Weekend

I hope everyone is having a nice Memorial Day weekend and making the best of things. When this quarantine insanity started, my initial reaction was to at least use the time to improve my health, now I’m eating lasagna in the shower. The shut-down police are winning. I’ve discovered some damn fine single malt scotches though.

My routine has been pretty simple, and I do try my very best to tune myself up before I go out of the house.

Dating has been different for me, but it’s coming back slowly.

But please stay inside, stay very afraid………………. forever, cuz we’re ALL IN THIS TOGETHER.

Anyone who was out in 2018 and 2019 (or even earlier) calling for a US recession via “natural causes” got it completely wrong. Of course, all of them pointed to the yield curve inversion as a sure sign that the end was nearing. However, while the virus will cause a recession, it has nothing to do with the economic or financial market “excesses” that this crowd was focused on. 

The uber bears are still looking for the Apocalypse, but the Nasdaq is up for the year and is just a kiss away from all-time highs, meanwhile, the SPX is nearing 3000.

Sentiment is still bearish, so as a contrarian I always looks at this as bullish, at least for the short term.

Hedge funds are still short and long positioning is really light. There is a historic amount of cash in money market funds just sitting there. This could be a recipe, at least short term, for a big FOMO rally.

It’s hard to believe that we are where we are considering stock buybacks have disappeared. It always helped to have companies constantly on the bid for their own stocks, but that is now considered a “bad look”.

The market can discount bad news all it wants but there is no way, no how, we should be trading where we are, but for that you can thank the Fed.

Hertz went bankrupt last week. It was already a mess but COVID stepped on its neck and put it out of its misery.

Carl Icahn must be in a world of pain right now because he owns 39% of this mess. Market cap was close to $10B a few years ago, now $400M and they sit on $19B of debt, 700K cars and 38K employees. Their creditors aren’t going to help them as they had issues for years already.

The markets up, but where’s the volume?

Volume spiked in March and is now falling. SPY’s volume is now -64% below its 3-month average, while the S&P is under its 200 DMA. When this happened over the past 20 years, U.S. stocks ALWAYS pulled back over the next 2 months, sometimes *very sharply*. So be careful, we could get a reality check at any point here and even though I went long some things recently, I will flip the switch quickly if we run out of gas.

The US & China are at their most dangerous moment since their modern relationship began in the 1970s. There is a growing list of disagreements (HK being but the most recent), trade, COVID accusations, technology theft….you name it, they hate each other. And don’t tell me that doesn’t matter just because the market is up.

If this market stays ginned up for a little longer, the short setups could be epic.

Here are a couple of setups that look bullsih.

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