Wild market conditions persist! Yesterday, stocks had a huge gap down opening, but then spent all day ripping higher and closed convincingly in the green. Today, the rally picked up right where it left off.
Talk about whiplash!
This makes it incredibly challenging to find directional bets with any degree of confidence. So, with implied volatilies elevated across the board, today we're hunting for another delta-neutral premium selling candidate.
And this time, we're doing it on an individual stock.
On today's episode I sit down with Financial Advisor Stephen Weitzel. Stephen and I have known each other for many years. We're both big fans of Technical Analysis, good food and college football. So this was a lot of fun!
Stephen walks us through his journey of first becoming a Financial Advisor, how helpful Technical Analysis has been for his practice and the journey towards $1 Billion in assets.
I've had a front row seat to Stephen's growth, both as a business owner and as a Technician. It's been really cool to see and I'm going to keep rooting for him and his team.
I always like to get different perspectives on the podcast, and I think this conversation is a great compliment to a lot of the other episodes we've done over the years.
With equity market trends in the US deteriorating, we have reduced domestic equity exposure in our Cyclical and Tactical Portfolios. We are adding equity exposure where we are seeing strength overseas and remembering that asset allocation decisions don't just come down to stocks vs bonds, but include commodities and cash as well.
This month marks the one year anniversary of the top in stocks.
And more specifically, I mean the top in the internals of the U.S. Stock Market. Remember, that's the best things were, and it's been a painful deterioration ever since, particularly for most U.S. Index Fund investors, growth investors and most individual U.S. stock pickers.
The new highs list these days is loaded up with ADRs, Metals stocks, Staples and Energy. Most of the other stocks have been struggling. Not all of them are down, but many are sideways at best.
This chart really tells the story of what's been going on. We discussed it on Tuesday night's call:
Key Takeaway: Optimism wanes, and pessimism builds as the II bull-bear spread narrowed last week to just 1.2%, down more than 4% from the previous week. That brings the spread to its smallest difference since early April 2020. But it’s not until bears outnumber the bulls that we reach levels associated with significant market bottoms. Nevertheless, a surge in pessimism could become reality with active equity managers continuing to reduce exposure, consensus bulls dropping, and major equity indexes testing their respective January lows. Whether sentiment has completely unwound or is still in the process of unwinding is yet to be determined.
Sentiment Report Chart of the Week: Unwound or Unwinding
The NASDAQ is getting plenty of attention for the carnage that is occurring beneath the surface. The stat that really sticks out for me is that 95% of the trading days over the past three months have seen more new lows than new highs. That weakness is now hitting the index and while the...