We got follow through on breadth: Quad2!
We got follow through on breath…
I lifted all my shorts; I am now 95% long only my small cap value momentum (mostly with a growth tilt) long:
Clearly Quad 2:
Above: we got 15 Quad1 - 2 exposures showing a 1-week relative strength high.
Quad 4 exposures are nowhere (besides the dollar, which is bullish trend).
Still, this is not the time for me to go into leverage, I might go to 100% but that will be it.
So far, this is not comparable to the beginning of January or March, the drawdown was not as deep, and sentiment was not as bad.
Biggest winners are PFIE and LWAY.
What is missing to be super bullish and go into leverage?
Above: This system picks stocks with positive earnings revisions in small caps: and it does not find stocks which means we are not blazing.
Also, COT positioning is neutral on stock futures (follow https://twitter.com/Crowded_Mkt_Rpt to get more details, in his recent interviews he lays out the neutral positioning).
Plus, there are a lot of victory labs from the bulls on Twitter, so there are a ton of people believing in this trend (the less believe the more stable the trend!).
Perma bears talking about the possibility of a soft landing. “China will not affect the US”. Bitcoin rally because we will get an ETF. Stuff like that.
What I am saying here: perfect spot for me to be long 100%, but not 140%.
My best guess is my small cap value momentum book is going to huddle along strong, there is not deep Quad 4 looming (macro vise) until the end of the year.
The reason for this: Small cap value momentum has historically great (e.g. low) valuations and the sentiment could not be worse on them, that is a tailwind.
So, all in all not a bad set of cards, just not the time to go all in with leverage.
For me it is time to stay flexible.
My best call longer term is still BRKB (if you can not short and have to be long all the time legally).
And I am stalking longer term Bonds (stalking, I am not long).
Last but not least, if you are a paying and or founding subscriber, I invite you into my discord. I am really looking forward talking to you :-) :-) :-) :-) :-) :-) :-) :-) :-) Let us build a great community: Humble, supporting and tolerant learners.
https://discord.gg/nZa7STkr
(Remember, I am not a super pro. I am a small-time trader with the wall on my back that tries to get food on the table and tries to learn as much as possible. This blog and the discord helps me to clear my mind, you basically follow a journey of a trader).
All the best and best regards.
Andreas
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