Discussion
As discussed this week, there is a volatility path into May that could be quite profitable if managed correctly. The one wrinkle, and a potentially major one at that, is the equity market is blowing through all overbought signals, bearish divergences, rising rates, and FED hawkishness - all of which suggests a 1995-1999 style paradigm could be in place on the back of an AI boom magnified by flows into the US equity market from international investors seeking AI exposure given America’s advantaged position in the space.
The 1995-1996 market path cannot be ruled out following what is likely a 3-5% pullback in SPOOZ starting Monday. As such, in a slight alteration to the Special Ops path discussed this week, I will more aggressively buy the upcoming dip than originally anticipated on the off chance the market doesn’t actually take a second leg down into May. Worst case I simply profit more than anticipated on a move back to SPX 5000 before the second leg down.
Powell speaks later next week, NFP is Friday, CPI the following week on March 12, then NVDA’s event is March 18. The window for a pullback is very narrow, as I don’t see how NVDA and Tech don’t rip into March 18 and beyond. If a second leg down is going to occur, it won’t go past May, as May is when Treasury begins its UST buyback program.