A Winning System for Timing the Stock Market

On Thursday, I was privileged to fill in for Doug Kass in the Daily Diary. If you haven’t checked out the Diary yet, you should. It’s where Doug Kass, a well-known hedge fund manager, tells the community what he’s doing and suggests trades that might make sense for members. And when I use the word community, I mean it. Doug and other members of our team interact with members throughout the day.

You can ask us almost anything!

Traders Have Been Sellers at 5700

When I fill in, it’s less about trading ideas and more about market analysis. That’s my strength. Yesterday, we watched the 5700 level of the S&P 500. All week, we’ve flirted with that level, and each time, traders chose to sell rather than buy. Ed Ponsi wrote about it in This Fantastic News for Stocks Was Overlooked as Fed’s Powell Stole Spotlight.

Here’s the chart of Ed Ponsi’s that I shared Thursday.

Ed also talked about bonds and that the 10 year treasury yield might be ready to tumble. Ed thinks 4% is in reach, and maybe even 3.25%. If you’re long treasuries, you could see some capital appreciation. (When yield declines, prices rise)

A Market-Timing Strategy that Works

I was born under a Bear Sign. And if you'd invested in stocks every time there was an important education or career milestone in my life, you'd have bought the market at many important lows.

Since I was born, the market is up nearly 6000% (I’m not old, I’m experienced). And yet, there were more days that the market was down over 20%, than days that it traded within 1% of a new all-time high. Isn’t that crazy?

Here’s a chart. The red line shows how far below the market was from a new high on each day. If the red line is at 0, the market is at a new high. If it’s at -20%, it was 20% below the previous all-time high. The blue line is the S&P 500.

I’ve also included key events in my life. Many big moments in my life coincided with bear markets. I don’t know why, but those milestones were also great times to invest.

The only problem is that I don't plan on going back to school and it'll be a while before I retire. So, this market timing system may not be helpful to you.

The other takeaway is that, throughout your life, you will encounter adversity. You’ll get through it and go on to set new highs.

Favorite Articles

This was a big week, with Fed and geopolitical news.

Maleeha Bengali questioned whether Trump and Musk are trying to engineer a recession that would force the fed to cut rates so that they can refinance the US debt load. Her belief is that a lower dollar will boost exports and encourage US manufacturing. How should you play this? Maleeha has suggestions for what gold and Bitcoin could do in Trump Could be Engineering the Next Bitcoin Surge.

Peter Tchir also looked to the White House for ideas. And, this time, it turned him bearish on stocks. It was Trump's tweet that did it. Maybe you saw it? It's the one that Trump told the Fed to lower rates. And then he reminded his followers of Liberation Day, the day that tariffs go into effect, potentially shutting off the US from global markets. Peter's thoughts on global de-risking can be found in Recession Risk Grows After Trump Turns Heads with Interest Rate 'Liberation' Post.

Around the Arena

The Best Job I Ever Had

Even though the DeLorean isn't a very good car, we all love to see it on the road. From the gullwing doors, to the stainless steel body, it appears to have inspired more than one Tesla model. Unlike a Tesla, the DeLorean is underpowered. Except, of course when Doc Brown modified one to travel Back to the Future.

I loved this interview with a former DeLorean factory employee from Autoblog.

Tesla Lies Again?

Since we just talked about the car that inspired more than one Tesla model, let's close out today's article by talking Tesla TSLA.

I've always been disappointed in Tesla's management. There's the time the CEO manipulated the stock price when he claimed to have "funding secured." Or the promise of Full Self Driving that has been just around the corner since before I bought my car in 2019. I'm still waiting. Or the fact that Tesla was built on the back of government subsidies but other, better companies won't have that chance.

In this article from Autoblog, we learn that Musk reposted a tweet showing that "70% of people in Germany would buy a Tesla again." The thing is, 253,000 of those "people" were bots originating from two US-based IP addresses. Meanwhile, Tesla sales in Germany have plunged as German publication T-Online finds that 94% of Germans Wouldn't Consider Buying a Tesla.

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