Good morning Investors! Big news, keep an eye on HDGE!
Last week the S&P 500 closed within the target area I've pegged as the likely end point for this bear market rally.
Theoretically, it could rally a bit more to that other point I have circled from late April. However, it's likely that wouldn't last.
Only if the market moved well beyond that--and on some substantive good headline(s) we don't already know about--would we entertain the idea that the bearish thesis must be discarded. It's more likely that we move lower, though; at least to that recent gap in the above chart around the 5300 area.
I still don't see the Fed "riding to the rescue" just yet though Powell in his post-meeting presser on Wednesday will acknowledge Q1's slight contraction in the economy. As much or more, though, he'll discuss:
1. The much higher than expected inflation number that accompanied last week's first look at Q1 GDP,
2. Last Friday's still decent employment picture and
3. The ongoing uncertainty over tariffs, et al.
Powell won't commit to anything further for June but that "all options are open."
So if nothing else, technically the broad market is about as overbought now in this bounce as it was oversold at the bottom. Those of you who are more aggressive/nimble can take, for now, some renewed advantage (if I'm right in the outcome) by adding back positions in both SQQQ and SPXU equaling 2% (each) of your portfolio.
Post-Fed will assess whether to do more.
Also go from a 10 to a 12% weighting in HDGE.
For more conservative accounts who prefer staying away from these inverse/leveraged ETFs, simply go to an overall 15% weighting on HDGE.
All the best,
Chris Temple
Editor/Publisher
Monday a.m., May 5, 2025
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