"What If?" - Addendum

On Saturday, Trump turned to look at a chart on Border Patrol statistics. He moved his head a “quarter of an inch” and avoided getting shot. In Trump’s words:

“The most incredible thing was that I happened to not only turn [my head] but to turn at the exact right time and in just the right amount.”

The Rotation of his head saved his life.

It’s in bad taste that I now bring up the subject of Rotation in the Markets, but this is the trading journal of a shrub, not Vogue magazine.

A few weeks ago, we called for Rotation from Winners (Nasdaq) into Losers (Russell). We titled the piece “What If?”, because it seemed so unthinkable at the time that such a Rotation was even possible.

HOW IT STARTED (excerpt from the piece, June 24th):

• “…the Russell vs the Nasdaq is down c.12% in the space of a few weeks. There’s c.10% upside just to get back to even”

HOW IT’S GOING (July 16th):

• The Russell vs Nasdaq spread is now +11% in just 4 sessions, the best performance since the Covid vaccine was announced! We Give Thanks!

Just imagine … “What if”… instead of being positioned for a Rotation, you were positioned for a Crash?

• If you were positioned for Rotation, you made +11% in 4 sessions.

• If you were positioned for a Crash…well, you missed out on making +11% in 4 sessions! For reference, the SPX is up +18% YTD so more than half of this year’s performance could’ve been made in 4 sessions!

Sure, the “Trump Trade” gave the Rotation an Extra boost.

Sure, we are entering the “Election Volatility” window and the Market can always correct.

But my point is this: To preserve one’s Financial Health one needs to put their biases outside the gate before entering the Arena. As I keep repeating:

“There’s s always something to buy and there’s always something to sell!”

And sometimes one needs to just… Rotate.

If only there was a perfect Meme for this…Oh wait:

Disclaimer:

This is NOT financial advice. This is the equivalent of Monty Python for Finance but worse: This is the trading blog of a shrub.

Don’t be Stupid. Seriously. How many times do I have to repeat this …