“Often wrong but never in doubt” is a quip attributed to President Kennedy’s speech writer, Theodore Sorenson, regarding the CIA. It could well be applied to traders and investors as well; it goes with the territory. We make our decisions, commit capital, and many times what we believed was the perfect set-up fails miserably and we’re forced to admit defeat and cut losses. That is how we survive, we grow, and we live to fight another day. Keeping losses to the minimum is key. Failure to do so ends careers.
There are not too many professions which lead to an upward career paths with a demonstrated track record of failure. We know of only a couple: politics and bureaucracy. For most people it is merit that propels the individual’s career, be that upward or downward. Meritocracy rules. Sometimes people get lucky, but more often than not it’s luck, paired with a genius or a base of knowledge, preparedness and competence.
Readers of this blog will remember what we have posted in the past: We see a similar analogue for today’s events and that of the Cuban Missile Crisis of 1962. History doesn’t repeat but it does rhyme.
Divination of future movements in prices and prognostication of markets is a tough business, but isn’t that what we as traders and investors do every day? We use the cycles of history and prices to define a roadmap for the future.
Often wrong but never in doubt!
In review, on our master cycle, we were looking for a low on Friday, February 25th or Monday, the 28th. A good low came in one day ahead on Thursday the 24th for the major indexes. Upon news of the Russia/Ukraine war, stocks exhibited a trapdoor opening that took out well defined support levels. An air of panic ensued as evidenced by the surge in the VIX volatility index approaching 38, and the CNN Fear/Greed index low of 20 on the day (extreme fear). As we write, those lows have yet to be tested.
Our master cycle calls for a short-term high in the beginning of March from the 1st to the 3rd with new money for a new month. Then a low around the 8th of the month and a rally into mid-month around the 15th, followed by a low toward the end of March. As it appears now, we expect a flat-to-down March for most of the major indexes.
It’s a fun exercise to call the swings in the market, but the real focus should always be the big picture. The master cycle calls for the next few months to have a decline of considerable magnitude, starting around March 15th and ending the last few days of June. That would fit in with the current geopolitical events that we are experiencing and Fed driven QT. There will be multiple occasions to trade from both the long and short side in that time period. Nothing is written in stone, cycles can and do invert from time to time and what is expected to be high turns out to be a low and vice versa. Let’s see what happens.
Stay safe and trade well.
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