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Animal Spirits Stirring
Throughout Q1, the narrative was bearish but risk assets moved up in price anyway. Right now sentiment is beginning to turn, with more commentators and Twitterati becoming more bullish. In this service we have been unrelentingly bullish through Q1; as sentiment improves our enthusiasm tempers somewhat. We have no change to our larger-degree charts, all of which continue to point to new all-time highs in the equity indices within the next 12-18 months. If however animal spirits take ahold of the indices and reach these levels much faster than we expect - and this can often happen when sentiment reverses - then you will see our own worries rise. The simple concept here is: what is the trend direction, which one ought to hold long, and what is the counter-trend direction, where one may wish to hold short? Right now the trend is up, and the countertrend is down. So in staff personal accounts we are positioned long for the trend, with the occasional short position to try to catch countertrends. When the next terminal high (reversal at the highs) is reached, our job is to try to call it, then to be short to play the trend (down) and long to play countertrends (up.).
And with that, onto our usual charts. Below we post the S&P, the Nasdaq, the Dow and the Russell all on a long- and short-term basis. We use the ETFs for the long-term charts ( SPY 0.00%↑ QQQ 0.00%↑ , DIA 0.00%↑ and IWM 0.00%↑ respectively) and futures for the short-term charts, taking advantage of the longer trading hours in the futures market to give us more data for the short-term moves.
These daily charts are for our Premium and Pro tier members only. If you’d like to move up to one of these membership tiers, you can do so right here.