DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.
About Our 'Market On Open' Notes
These notes, published daily, form part of the Equity Index Strategy that we employ here in the Inner Circle service and, indeed, in Cestrian Capital Research, Inc staff personal accounts. You can read all about our Equity Index Strategy, here.
Amidst the permagloom of 2022, victory was declared by the wise in Q3. In truth, the highest- of high-beta stocks had mainly bottomed in May last year, and proceeded to trend sideways in a yearlong accumulation pattern suggesting Big Money was getting to work readying itself for the up-move that was to come. But if you had eyes with which to see, and an open mind with which to think, you knew that the October lows were the lows. The S&P and the Nasdaq each put in a spike low, tripping a key Fibonacci retracement level from that whole move up off of the Covid lows, and reversed upwards with aggression. Not that this prevented your regular doomsayers from continuing to proclaim that Ye Ende Would Soon Be Nigh. And when a low-volume selloff happened into year end, yea verily was the Apocalypse celebrated.
2023 to date has seen a major run-up in equities across the board, and whether you choose the Nasdaq, the S&P, the Dow or the Russell 2000, the smart money has been long all year; the even smarter money has taken advantage of selloffs to add to those longs at lower prices; and the whip-smart money has shorted the selloffs and used those gains to roll into new longs. The dumb money - and we don't mean just Mr. Miggins down the street, we include plenty of professionals who should know better - has continued to short the rally or stay on the sidelines in cash (because 5%).
The selldown since July is, in our view, probably over. The one niggle we have is that in a number of the indices and the big single-stock names haven't quite completed an A=C correction from that July top. So we may see one of those December 2022 low-volume dumps just to further scare the civilians. Or not. Either way we think the smart money is now positioned long, and that any completion of a C-wave may be ignored and a drawdown accepted in the short term.
Below we step through our analysis of the S&P500, the Nasdaq, the Dow Jones, Russell 2000, Bitcoin and Ether. This is for our paying members only. If you'd like to sign up for a paid membership, you can do it right from the button below.