What's next for the markets
Quick update
First: in my last update for paid subscribers I added one name to the 10X Small Bets Portfolio. Link
Well, the company went up +278% yesterday, probably because a short squeeze.
I would sell half of the position today.
In my POT portfolios, I am not selling because it is a “never sell” POT as you already know. Otherwise is wise to sell half after such a monster move. Just in case you bought it.
Now back to the markets.
Yesterday the Consumer Price Index (CPI) in the US was better than expected and indexes reacted well.
Inflation may have peaked, officially, which would be very good for the prospects of risk assets like stocks.
A few times I mentioned how inflation, recession fears, and monetary policy are key to determining asset allocations: “as nobody knows when the inflation will peak and then how far the FED will need to increase rates... institutional money will stay away from high growth companies” (April 19 update).
The market has been anticipating this positive development and indexes have been improving for some weeks now.
The Nasdaq is up 10% since I mentioned that it was time to “dip the toe in the market waters” again. Here is the Nasdaq daily chart:
The blue arrow signals my update.
Now what?
Is too early to call for inflation to have peaked;
Energy prices, especially OIL are declining;
Credit conditions are improving again;
The outlook is much better compared to a few months ago as the probability of a light recession or no recession at all has increased.
The short-term trend is UP, BTW I expect the market to stay volatile over the next few months and ready to go up (wall of worry) or nose dive down as more information on where the inflation and GDP data are heading.
For long term investors is still a good time to keep dollar cost averaging (DCA).
For more short term investors (3 to 12 months) the best course is to manage their positions with stop losses: if your trades are working, move up your stop losses regularly so as to capitalize and protect your capital in case of a clear change of the trend to the downside.
POTS PERFORMANCE REVIEW
10X FREE CAPITAL POT [Link]
Since inception: -21.5%
Vs. SP500: -20.5%
Annualized: -31%
10X SMALL BETS POT
Since inception: -6.8%
Vs. SP500: -8.2%
Annualized: -10%
That’s all for today’s quick update. I’ll keep posting when I’ll decide to add to the POTS again.
Have a great day!
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Important:
this is not investment advice. Consult a licensed financial advisor before making any investment decision.