Big Picture - V Bottoms?

And just like that, we go from breakdown stages to some of the steepest V bottom's I can remember. Thanks to the cease fire last week, the market popped and continued to climb into the end of the week. Turning a market that was in a clear stage 4 breakdown and testing correction territory. Into a market that is, back again, a few percentage points away from retesting all time highs. 

If there is any key lesson from this recent market weakness and then dramatic pivot (for now) is why we always stay the course when it comes to consistent long term investing. Since catching the bottom is such a hard feat in the moment. Just think back to this time below. 

On March 30th the S&P entered into correction territory for all of an hour.  After selling off for 12 of the last 14 days. To have been able to predict the future at that point and load up is a fun dream to think of. But the realities are much harder to execute, and that is why we want to remember why we follow a consistent long term approach to keep you in the market and buying no matter what. As we only know where the low is, often much later down the line. 

Now that the market (for now) has V bottomed off that low, in hindsight the low looks so obvious and that is the tricks the markets play. After the fact it looks so clear, yet in the moment, it rarely is the case. 

Now as much as the market turned on a dime from the cease fire with most markets and sectors either snapping up in a steep V bottom or starting to show signs of potential bases forming. It was often foolish to try to chase names gapping up just because they are. For those who were already positioned in names the gap up was a gift. But if you were in cash, there was not much to do. 

Over the weekend, Trump announced a blockage of the Strait of Hormuz. That blockage will cause Energy names to pop coming into the week and could just as easily turn last weeks gap up, into this weeks gap down. 

Now I am no geopolitical expert, nor would I ever try to pretend to be one. But charts often help drown out the noise. The energy sector has been on a monster 3 month breakout (monthly chart above) while the month of April has been an overall pull back for the sector as a whole. Sure, we will most likely see a gap up in Energy names to start the week and maybe even for a few more days this week. But just like anything else this year that has rallied hard such as Gold or Silver. After the top is in, it tends to be the top for some time. 

Gold put in its high at $5,000 an ounce when people were lining up around the block to chase it. Only for lower highs to continue to form in 2026. Nothing could top that mania at $5,000 an ounce. Just like what has already happened with this conflict oversea is not going to be topped by a blockade that can be stopped with as little as a tweet. 

It will be interesting to see how much the market gaps down into the week ahead. Ideally if we do get a gap down, we want it to settle out around 660 to fill the gap. As with major markets gaps eventually get filled.

The only thing we do not want to see is this 680 being the "lower high" from this potential gap down and the market not being able to climb back to 700 area in time. When Gold was not able to reclaim that high, its been lower highs and lower lows since. It is ok for the market to gap down or fill the gap. But it needs to stay above 630 and continue to make progress back towards the 700 all time highs. 

This market continues to be a waiting game on the swing trading side of things, until this conflict is put to bed. Just like with the Tarriff war, the market was horrible, until it was clear that it was over and trading woke back up. We saw a glimpse last week of a market waking back up and a few set ups here and there. So just be patient and continue to ask questions or post charts in the meantime. 

P.S. For all the Big Picture Tax Clients, isn't it a nice feeling that your tax return is already filed or on extension days before the deadline :)

If you have not filed or need some help, we have plenty of time to help as we have successfully filed every Tax Expert client ahead of the April 15th deadline. 

                                                                            

From Bennett

Macro Rotation Outlook

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