No time to be a hero!
Protect!
System book for Regime 1 or 2:
Do we have Regime 1 or 2? (RS = Relative Strength) —>
So none of the above criterias point to Regime 1 or 2! (Again: none!!!). And of cause we do not have a trigger long situation as well.
System for Regime 3 or 4:
Do we have regime 3 or 4?
At the end of the day, I see much more red then green. 3 or 4? It does not matter.
So, I will put on an IWM short here to protect my 60% long positions.
Performance since I am 60% long again:
Not bad but could have been better if I would have put the short to offset the longs.
My best guess: this is simply not time to be a hero! Could a rally come? Yes! But it would take almost impossible strength to turn that thing around from here for good:
Earnings would need to surprise monster big time to justify that kind of valuations.
Economically we would need to turn around big time (the slowdown is ahead of us, not behind!).
Positioning on the futures would need to get much more bearish.
New meme themes would have to emerge (not the old ones: Crypto, pot stocks, EV Stocks, stay home stocks etc.). Forget the old themes they do not survive and when the survive it takes years for a comeback (just look at a long term chart of Microsoft!)
The fed would have to say we are not raising or raising much less
Small caps with extreme compelling valuations would need to emerge (not the case yet, since value systems are up to 90% in cash).
Mega Big Cap Growth Momentum would need much lower PE-Ratio (around 20!)
+ high relative strength on mega cap growth stocks, even better mid cap high beta stocks + value momentum small caps with monster strong relative strength after a big selloff (did we have a big selloff >20%. No!).
This is not the time to be a hero!