There is a real power to always staying open-minded.
We can’t be dogmatic with our approach or our positions on the market. It’s dangerous.
The data is always changing, and we need to be nimble and ready to change with it.
That brings me to the point I’ve been thinking about more than anything lately.
I think it is absolutely imperative that we remain open to the possibility of a v-bottom.
While there is plenty of data that suggests this is more likely to be a prolonged bottoming process… there is also a growing amount of evidence indicating we could rip right back to where we were.
I mean, it’s already happening overseas.
MSCI country indexes like Germany, the United Kingdom, Japan, and Singapore are basically back at or near their cycle highs. Other countries like Spain, Greece, and Poland have already blasted through these levels.
And what about the action from Bitcoin?
I don’t think US equities are going to throw in the towel in an environment where global risk assets and cryptos are breaking back out.
So, I think the real question is what kind of a bottom are we looking at here?
Is this time going to be like 2022?
Or will it be more like 2020?
This chart highlights the bottoms during those two cycles.
My favorite bottom indicator nailed both turns, but the way we reversed could not have been more different.
If this is going to end up being more like a v-bottom, and more like 2020 in that way, price will keep letting us know.
The S&P will reclaim its VWAP from the all-time highs and the other major indexes will do the same.
Once we’re above it, we’ll be a whole lot more aggressive on the long side when it comes to broad market exposure.
In the meantime, we’ll keep leaning on relative strength and finding pockets of leadership. It’s been working for us. Breakout Multiplier members have sold 3 doubles since last week. Palantir and Summit went on to deliver roughly 5x returns. You can see the trades here.
