Hitting Your Own Personal Reset Button

Hitting Your Own Personal Reset Button

Many of you have reached out asking how in the world can a slightly better wages economic report last Friday along with inline CPI create the appearance of a soft landing and lead to a look thru where bullish for stocks.  Logically, it cannot.  However, remind yourself how illogical the moves were when many software companies got to 15-20x sales.  This morning the pre market looked bleak with yesterday appearing like your classic S&P stopped right at the 200 day 3981 and was rejected.  $JPM and other banks reported “ok” numbers, but they had run into their reports.  The same with $DAL.  At the same time, $TSLA slashing its prices across the board in the US and Europe had the stock down 5% early as demand and gross margin worries abound.  Lo and behold, by 4pm, all the major indices closed up.  What gives?

The soft landing narrative, no one is long narrative, shorts scramble to cover narrative, the currency will help multi-nationals narrative and finally CTAs are large buyers now (from net short).  In our WhatsApp text stream for subs I discussed these items mid week and the rationale for the markets to turn to buy all dips until you get hurt and “own the market” not the stocks.  Think about it for a moment.  In 2022, those with a short bias had a few battles (painful rallies) but, for the most part, if you stuck to your guns, every rally was eventually sold and the markets finished the year on their lows.  Mission accomplished Mr. Shortie.  Remember the substack I wrote “nothing good happens under the 200 day?”  We are beginning to see this flip to the positive.  All good things happen when you can keep above the 200 day.  Both the $SPY and $IWM have re-taken their 200 days since January 1.  So, now, the market playbook is to re-fill the boat with longs (eviscerate the short base) and buy all dips until you get hurt?!?  So it seems.