Sell Rallies

Having two short weeks on either side of Easter is rarely an ideal time for commenting on what the markets might do over the short term, but as that is the name of the game, let’s go with it.

We talked about “selling in May and going away” before the break. And how we should be pleased to have a few weeks of strength after Easter, as it might allow us to sell various instruments at higher prices before the summer.

I still hope things shape up that way because, even though I don’t have a dog in the race, I want to make some quick dough to pay for a nice vacation. That is more likely to happen by selling the rallies than by chasing the current trend higher and getting caught when the markets turn.

We will likely see more positive commentary when or if the markets increase in value. Yet, I find it difficult to see any good reason why the markets should go higher in any sustainable fashion, with our economies in the mess they are, especially with the low quality of our current political leadership.

Most of us realize that our banks are still under a lot of pressure, and the potential for increased problems, especially in the real estate sector, is genuine and very frightening.

If I were a senior banker, I would be looking to cut my exposure to the absolute minimum, hoping this might buy my organization more time.

How will this be achieved? If it were me, I would try to run the markets higher, hoping to unload what I have onto the unsuspecting, easily fooled speculator.

Running BTC higher is the easiest, considering how easy it would be to get a million stories written on social media, shouting about how BTC will rocket when banks start to collapse.

Moving the stock market higher will need a concerted effort by numerous big players and might even need a little help from Uncle Joe’s Administration. Still, whatever they do, they cannot undo the profound damage already done to our economies by focusing on changing how Americans think instead of how they prosper.

In my many years as a market participant, I had never witnessed a time when politics had the type of influence over our markets and economies as has been the case since Biden entered the White House.

As commentators, we prefer to concentrate on the financial data affecting our markets. Because politics is contentious, many commentators ignore it to avoid alienating certain parts of their client base.

In “normal” times, this would be fair. But we no longer live in “normal” times.

The idea to cut energy production in the USA, adding to inflationary pressure, was an ideological decision.

The ESG policy makes it increasingly difficult for companies to survive unless they fulfill the societal standards set by massive investors and lenders, such as Black Rock, or the now-bankrupt SVB.

More importantly, the cost of infecting our free markets and communities with this debatable ideological experiment has caused national debts to rise far above what we could call sustainable levels.

As for American foreign policy, it’s been a global disaster and has led to the dollar’s demise as the only global reserve currency.

But here is the rub.

We have been so accustomed to looking at global growth through a Western lens that it is hard for many of us to accept that our votes and actions are no longer the driving force behind economic growth and development.

Moreover, the cost of our ever-increasing imports is no longer dictated by Western influence but is now heavily dependent on decisions made in other countries, mainly countries with cultures, ideologies, and an appreciation for free markets that are far different from ours.

That makes it extremely difficult to plot a safe route through the current stormy environment, especially when relying on Western financial data, which was extremely useful when the USA was the only global superpower.

Over the past few years, I have made more money trading against the government’s outlook and the general view than when going with the flow. I have always been a contrarian trader, but I have never seen the number of positive trades outnumber the negative by such a large margin. Sadly, that indicates we are better off not trusting what we read and hear than following the noise.

There are no crystal balls out there and no solutions on which you can rely 100%.

But Hey! Isn’t that why we all enjoy these crazy markets?

Until next time.