Finally, rotation!
Throughout the year, we’ve discussed the rotation out of mega-cap tech stocks into higher beta assets, analyzing the accumulation phases that anticipated changes in monetary policy.
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Tipping Point?
It’s been a long time since we’ve seen a positive narrative in the markets. Coming out of COVID, it’s been a never-ending stream of negativity. If it wasn’t a new strain of COVID, it was a new war breaking out or that mystical, phantom inflation that crept its way into our economy at exactly the wrong time. Pick your headline; it’s been nearly three years of one thing after another.
Late Stage Tactics
There are three types of trends: up, down and sideways. It’s far easier to make money in either an up or down trend. There’s a number of reasons for that but it really boils down to being on the same side of the trade as Wall Street. To do so, we’ve got to be able to recognize where the asset we’re looking to trade is in its cycle. Once there, we need to manage our own expectations regarding shorter term price behavior.
Trend Change Opportunities Continuation
After seeing buyers stepping in throughout the month of March as breadth began to look stronger, April has seen sellers returning. The latter stages of accumulation phases can often be characterized by a lot of backtesting. Large operators are still accumulating to fill their inventories while prices are so low.
Trend Change Opportunities
Bullish sentiment continues to dominate as buyers have remained in control. Major indexes are setting new highs, recessionary concerns have subsided and easing monetary policy is on the horizon. Demand > supply conditions are becoming more prevalent as the breadth of overall trend change expands.