The market continues to chop sideways. I don’t think anyone is surprised, but if you’re not starting to prepare yourself for a pullback in the market, then do so. A recession may hit us as soon as this year or may take much longer to materialize (most experts tend to land on late 2019). Either way, it’s clear that the US equities market has shifted away from a ‘rising tide lifts all boats’ environment to a selective, stock-pickers approach with shorter time-frames and more active management of stops.
SPY Daily
As you can see, the market was a money making machine prior to February, 2018. The increased intraday volatility and overall directionless action in the equities market this year is not a coincidence. Most economists attach this change in market momentum to the FED’s quantitative tightening (QT). QT started in Q1 and affects liquidity and credit. If QT alone wasn’t enough, the interest rates are headed up, as well – both moves looking to keep inflation in check… who knows if it will work.
More on QT effects on the market by Bloomberg (June 27th, 2018).
Although I tend to be a bull trader and spend little time looking for shorts, when the market feels heavy or without a clear catalyst, I will spend time shoving some of my money in short-term, no/low risk investments like 12 month CDs, dividend stocks, and high-interest savings accounts. Again ,these moves are a way to preserve capital and less about growth.
Examples of recent money shifts:
April – added money to Marcus Savings account (1.8% APY)
April – Bought 12 month CD, also at Marcus (2.2% APY)
May – Increased position in $MMM and $JNJ in retirement account (dividend plays)
Overall, I’m still ~75% in short-term long trades or cash equivalents ready to be allocated. In other words, I’m not fully in the safety-first camp, but I’ve dipped my toes into the pool.
Current Positions:
In my short-term trading account, I’m current positioned in cash (70%), $EKSO, $ADBE, $TTWO, $C, $AAPL, $SYK, $CRON
Stocks on Watch:
$ALXN above $125
$IIPR nice daily chart
$GWPH on pivot daily
$TDOC on reversal watch
$SPLK on reversal watch
$TECH on horiz support
Quote of the day and investing life lesson…
“We thought we were being advised by trustworthy people when, in fact, they were using us to validate their own choices.”
From “This is the Year I Put My Financial Life in Order,” by @jswatz
— гץคภ 🦏 (@ryanmathews) July 1, 2018
wknd reads:
AI: A primer: https://t.co/AqbcmH0EZq
Rural Amer is Pissed: https://t.co/Nui5NFYujd
FED's QT rolling markets: https://t.co/6FZvPhhdDj
Crypto Commons: https://t.co/hJIyzLgjHU
Join New Economy: https://t.co/lGExcgncII
Retirement Savings Prob? https://t.co/rRvRPENJIv— ЯYΛП 🦏 (@ryanmathews) July 1, 2018
