➤ I'm back from my holiday and fully recharged. Since my last technical update, the equity market has made some interesting moves that we need to examine.
➤ Foremost in my mind is of a potential medium term top that has been reached.🔝 I'm using S&P500/SPY as the market proxy. If we look at the market since March 2022, there has been two previous occasions where this scenario has occurred: 29th March and 16th Aug. The VIX fell below 20 and then rebounded higher. S&P500 proceeded to then decline by around -20%. 📉
➤ This scenario has just played out with the peak on 1st Dec. VIX has bounced higher after falling below 20. IF history repeats/rhymes, we are looking for another 20% drop. 🙀 That would take us down to 330/3300 for the SPY/SPX500. Each drop occurred over a two month period. That would mean both an ugly end to this year and start of the next.
➤ For this to occur, the market will have to counter both the Christmas rally and a historically bullish January. Readers would point out Jan this year as the perfect counter example.
➤ I currently hold a -25% short exposure. The maximum portfolio exposure is +/- 200% on capital, the level of highest conviction.
➤ Conclusion: History does rhyme...but is it the Bullish or Bearish rhyme?