Quick Change
Posted on Sunday, November 12th, 2023
Like the weather in Atlanta – Things changed fast in the market last week. We swung from panic to outright greed in the space of 10 days. Now that we are in positive gamma, the market is just grinding higher until the next expiration, which is this Friday. Things have the potential to change again after the expiration on Friday resets the market, but I think that we will not see any significant changes given that the next week is Thanksgiving. Are we just going to see a market melt-up for the year’s end? We have probably already seen most of it. The market is swinging around too quickly and that indicates to us that we are still in a cyclical bear market.
The leaders in this market, like Apple and Microsoft, are working their way to higher ground, and that is a positive sign. I respect this rally, but I have no desire to chase it. I expected bond yields to peak at 5.35% in November on the 10-year. We got to just shy of 5% and turned back down to 4.5%. The stronger the bond market gets, the more the Federal Reserve will have to talk down markets. So, I think investors jumped in too soon probably just because the calendar is getting ready to flip. This move in bonds doesn’t leave much room to rally, but the year-end could force more investors to continue to chase.
This is what we said last week, and it still holds true. The rally this week was because so many were underinvested and were forced to buy. The other impetus was the end-of-the-year rally which is very much feared by those under-invested or short. We said we were going to have to be nimble… I don’t want to chase but mid-month we should see some pullback. 2024 is going to be another story.
We have no desire to chase as we see the next decade running lower investment returns. Playing the bottom and top of ranges may go a long way to increasing our returns. Stay patient. Stay nimble. Do all the little things right, like managing our cash. Don’t chase.
“Short-term volatility is greatest at turning points and diminishes as a trend becomes established.”– George Soros
I think we aspire less to foresee the future and more to be a great contingency planner… you can respond very fast to what’s happening because you thought through all the possibilities, – Lloyd Blankfein
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill
To learn more about us and Blackthorn Asset Management LLC visit our website at www.BlackthornAsset.com .
Disclosure: This blog is informational and is not a recommendation to buy or sell anything. If you are thinking about investing consider the risk. Everyone’s financial situation is different. Consult your financial advisor.