Summary
- Face ripping rebound rallies are normal in bear markets.
- Use rallies to trim stock and ETF positions that you have too much of.
- If you have any covered calls you would like to close, now is a good time ahead of a rally.
- Continue to target companies that benefit from #4IR tech, decarbonization and supply chains moving back to America.
- Watch and listen to this week’s Macro Dashes webinar, it’s very important. And remember, follow the big money.
I don’t know when it will happen, my guess is in July now, but we will see a face ripping rebound rally at some point. If it comes sooner, then you want to sell into it.
However, if we get a deep dive next, then you want to be a selectively buyer since so many stocks are oversold on monthly charts and undervalued. That is particularly true with small caps and some mid caps, with emerging markets close.
What’s in a TRIN?
- If AD Volume creates a higher ratio than the AD Ratio, TRIN will be below one.
- If AD Volume has a lower ratio than AD Ratio, TRIN will be above one.
- A TRIN reading below one typically accompanies a strong price advance, since the strong volume in the rising stocks helps fuel the rally.
- A TRIN reading above one typically accompanies a strong price decline, since the strong volume in the decliners helps fuel the selloff.
- The Arms Index moves opposite the price trajectory of the Index. As discussed above, a strong price rally will see TRIN move to lower levels. A falling index will see TRIN push higher.
The TRIN today was over 6. I don’t think I’ve ever seen that. It implies another leg down in stocks soon. So, make sure to use the Plug & Play Stocks and Global Trends ETF to be a buyer if that is in fact what happens.
The Great Divergence
The Great Divergence continues to play out, it’s just not smacking people in the face yet and won’t until the next bull market when zombies don’t come back to life.
What is it I am calling The Great Divergence? It is the separation of the wheat from the chafe. It is the cream rising to the top. It’s the undead zombies starting to die.
It is companies with no or low growth, or outright shrinkage, that require financing, falling and never getting back up. It is the zombie stocks, mainly large caps, dying.
Those S&P 500 stocks that fall off the index throughout this decade will be replaced by other stocks. I anticipate at least 100 by decade end. We only need to own a couple dozen to get very wealthy.
That’s why I have a mid cap and small cap focus. It’s where the money is. It’s even where the best dividends are in most cases. See our Non-S&P 500 Dividend Stocks on the Plug & Play.
Focus on #4IR And Decarbonization
The clean energy transition will take decades, but there is a big ramp coming in about 4 or 5 years once there’s enough metals and minerals being mined and processes, as well as, some advances in tech. The supply chains and manufacturing are being set up now.
Decarbonization isn’t just solar and batteries. It’s efficiency, green hydrogen, carbon capture and anything that reduces our carbon footprint. It’s huge business. And, it’s going to get huger because climate change is real, or at least the governments of the world has decided it is.
Either way, it’s where money is moving. The divestiture movements and commitments by big institutional investors of fossil fuels is going to crush those investments at some point. I again strongly urge you to sell into strength on anything connected to oil drilling and transport. Stick with natural gas related investments and biofuels refining which both have longer life expectancies.
That tech is what is considered fourth industrial revolution technology or #4IR. It’s the future. This is what Salesforce called it:
You might have heard me say a few times “demographics and robots are destiny.” This is a take on an older phrase “demographics is destiny.” What we are about to see is a “rise of the machines” to do a lot of work we don’t want to do.
Given we have a labor shortage, that promises to get worse as the Baby Boomers and then Millennials age, the machines will come in handy (so long as we don’t let them sell us to the aliens).
As investors, we want to invest with the big money, not against it. We don’t want to buy what they are selling at inflated prices. We want to buy what they are buying at cheap prices.
The big money is buying heavily into #4IR and decarbonization. 4IR tech is directly enabling a shift towards a lower carbon footprint. Where we can double dip we want to.
This Week’s Macro Dashes Webinar
This is a must listen to stuff. I explain my thinking and explain some things I don’t write about publicly. Take the time each week. At least put it on in the background while reading World Series of Poker highlights on PokerNews.com.
My Upcoming Schedule
There will be a webinar Monday, June 20th discussing our Plug & Play Stocks.
There will be no webinar on Thursday, June 23rd or Monday, June 27th as I will be playing in World Series of Poker tournaments.
I will be back on Thursday, June 30th.
Look for Investment Quick Thoughts or other regular articles as I’ll put out a brief piece each day. Excuse typos, there’s likely to be a few, there always is when I work by laptop.
Wish me luck. 5 WSOP tourneys to see how good I am. I’m guessing I’m ok, but not great, so, I’ll probably keep my day jobs.
That’s Greg Frank. He took 59th (out of 5919) in the Senior Event of the World Series of Poker in 2018. That’s my bogey. Beat 59th. There’ll be over 10,000 players this year.
My poker league in Greater Milwaukee. Tough league. Over 20 guys who have cashed multiple pro events. Guy in the back runs it. He took 10th in online WSOP last year.
