Broad Market Outlook
It may be hard to remember but there was once (and multiple times) that raising rates were so scary that it would send the market free falling, but as the story and spin changes with time, it has now become a savor to the market.
In time, long from now, the market will eventually become fearful when the FED decides to stop raising rates, as they will want what they no longer have, which is common with most things in life. As we are wired to become dissatisfied with whatever we have and satisfied by only what we do not. Inflation was great for the market and most investment classes but now we want something different.
The start of this year and up till recently was another great example of the market giving us exactly what we did not want, which was a breaking down market.
In between those few good weeks (last week for example) can cloud our memory of the last few harder months but now that we have made it through what seems to be the worst of it for this year. We might be walking out of the storm with a bit more useful experience.
There was a quote from a book recently (unrelated to the market) that said:
"pain and loss are inevitable and we should let go of trying to resist them"
Which could not be more true related to the markets, after enough time being in an easy market, we lose some of the benefits of experiencing healthy does of pain, and if we avoid experiencing it enough, we become disconnected from the realities of the markets. Pain does not mean that you are required to loss money but it can be just like the last few months where sitting and doing nothing could have felt painful day in and day out.
It was great to see that most have been able to truly stick to your sit out power as you may have lost some money which is completely understandable when the market is falling but for most, at least who I've been talking to, the overall losses pales in comparison to what the market dropped.
As we start to leave this breakdown stage and start to enter a new basing stage, we want to remember those periods of pain and loss so we avoid chasing names after a few sunny days.
When markets are trading in bases, we want to be thinking to sell on the 4th and 5th day up into resistance, not looking to buy when everything looks perfect.
Continue to stick to your game plans, continue to scan for the best charts and put risk on when the time is right for you.
Macro Rotation Outlook