Here Is My Strategy for This 'Worrisome' and Tricky Market
I’m at about 38% cash overall and that's likely to increase.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Excitement about a strong Nvidia NVDA earnings report and a court ruling against Trump adminstration tariffs has failed to enthuse market players. The DJIA and Russell 2000 are already in the red, and the S&P 500 SPY and Nasdaq 100 QQQ are fading quickly. The Magnificent Seven is leading, but breadth is a problem, with only half of the Nasdaq 100 stocks holding on to gains in the early going.
CNBC keeps running a headline that this has been the best month for the S&P 500 since November 2023, but that is due almost solely to the delays in tariffs on China and the European Union. At this point, It does not feel like this is the blast-off of a new bull market.
The primary headwind is continued concerns about slowing economic growth and sticky inflation. Many economists are still convinced that the fallout from tariffs will be felt soon and make it difficult for the Fed to cut rates with inflationary pressures staying elevated.
This pessimism is reflected in the indexes, which have been stalling but repeatedly saved by news flow like the delay of tariffs on the European Union and hope for more trade deals. AI has regained its footing, which has helped as well, but the lack of momentum Thursday morning on the Nvidia report is worrisome.
I’m unimpressed with the action I’m seeing in individual stocks and have not been putting any new money to work lately. I’m at about 38% cash overall and likely to increase that due to poor action in individual holdings.
My game plan here is to maintain higher levels of cash and stay patient for charts to develop. I don’t see much potential for immediate upside and don’t want to chase momentum. There are only about 175 new 12 months currently, which is unimpressive given that the S&P 500 is at its highest levels since February.
I believe that we are not going to have many good entry points until we have a sharper drop. I’m looking for the gap formed on Monday morning on the EU news to fill before I consider higher exposure. I still have some short-term trades going, but the list of stocks up more than 10% is very small, and there are few pockets of speculative interest.
I’d like to be more upbeat, but I’m not feeling it and am prepared to be patient.
At the time of publication, Rev Shark had no positions in any securities mentioned.
