Think of the market like this:
Offense = looking for opportunities to trade and invest.
Defense = looking for opportunities to hedge or protect.
Right now there is a shift occurring that looks a lot riskier than what we have been used to with the market.
So…IS RISK INCREASING?
We believe it is … and here are the signs we see that are telling us “yes”.
For the first quarter of 2024, major indices continued to advance, largely driven by “risk on” / “growth” assets and in particular Technology/Semiconductors (AI).
In March we saw some upward market momentum stalling in these areas, with an eventual retracement in the broader markets beginning in April.
However, by mid to late April ( with the exception of Bitcoin), momentum started creeping back into the market.
But now Bitcoin (price is still below overhead supply as of this writing) has started gaining momentum and is rising in unison with other “risk on” assets as well:
On 5/15/24, the SPX, QQQ, and DIA continued their strength, and yet again closed at all time highs.
So, are we to believe the old saying, “Sell in May and Go Away”?
Do the broader markets take a breather/retrace in the back half of May after all time highs with weakening macro economic indicators and/or geo-political news yet to come…
…OR, do “risk on” assets continue to outperform and lead markets even higher?
I wish there was an easier answer.
Only time will tell but we will be watching and monitoring closely.
This is something that needs to be on your radar right now, even if we’re in “wait and see” mode for a little bit.
Stay tuned for what’s next.
Happy Trading!
