The Weekly ROAR: S&P 500's Rorschach Test
The current bounce in QQQ, SPY and the rest are a strong signal for all investors
April flowers bring May showers. That’s the idea, right? We deal with some rain, and a few weeks later, the flowers start to bloom. But the S&P 500 (SPY) and the rest of the stock market didn’t get the message on that April thing.
For those who have only known buy the dips as business-as-usual investing, I will not pour rain on your first half of April. However, part of being a risk manager, one dedicated to helping others understand how these post-pandemic markets work, I have no choice. I need to remind you that nothing has changed. And that May showers are still a real possibility. Or maybe late April.
Check this out, one of several updates we’ve made to our ROAR.PiTrade.com analytics site since this time last week. Most of those new features have a common purpose: to help you be your own DIY portfolio manager, using the type of research, risk-managed investing process and organization system I used for decades, back when I managed other people’s money.
I’m looking forward to walking our premium subscribers through many of these on the live show today, and for the next few weeks. I truly believe we have created a one of a kind toolkit for investors. Not only to buy and sell ETFs and stocks, but to truly understand who they are as investors. That’s what gets lost in all the Wall Street noise.
Note that ROAR Scores for SPY, QQQ and DIA have all increased to 50. They were 20 not long ago. That’s like falling behind by 4 runs early, and tying the game in the middle innings. But to win the game, you need to get the lead, and hold it.
As we have been reminded constantly this year, the toughest thing for most asset classes to do these days? Sustain upward moves. Otherwise, time creeps up on us. Each time a rally fails, we do what I call “counting backwards.” When it goes on for a little while, that’s OK.
But psychologically, every market cycle has a point at which, like the proverbial frog in boiling water, we see a rally like the one in progress for SPY and the stock market in general, and think “hey, what an awesome market!” We tend to selectively repress the down cycles, until they finally extend out far enough where we can’t help but figure out what’s happening.
This is SPY since the end of last October. Let’s do a Rorschach test. What do you think of this picture? Do you see a market that rallied hard to get back to “not losing” status from 6 months ago? Do you see a rally that promises to lift the market to new all-time highs, on the way to another 15-20% up year?
