Market On Open, Tuesday 25 February

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From Optimism, Ruin

by Alex King, CEO, Cestrian Capital Research, Inc

I think we can sum up equity market sentiment right now pretty much this way:

For now, as you will see below, we remain in a bull market. It may not feel like it if you are highly levered and unhedged long (as in, levered via the securities you hold - options, levered ETFs etc, or, levered via margin, or both). But most probably in my considered opinion, the next big move in stocks is up. Not necessarily today.

The bigger opportunity though, in my view, is bonds. US government bonds in particular. Whether via futures, bonds themselves, or via ETFs such as $TLT, I think there is a lot of upside in USG fixed income instruments. We cover TLT and its degenerate cousin TMF every day here for paying subscribers.

Before we get into the detail, a word on hedging.

Learn To Hedge

We have seen a nice uptick in people joining our ’Trading With Van’ service of late. Van posts real-money trades using a simple long/short equity index strategy - no single-name stocks, no sectors, no commodities, it’s as simple as can be. You can use the service for downside protection or as a complete trading environment. He includes Nasdaq and S&P500 instruments - both futures and ETFs can be used. Take a look here.

Now, let’s get into it.

Short- And Medium-Term Market Analysis

If you want this daily dose of pattern recognition, and you aren’t yet a subscriber of course, you can read about and choose from all the subscription services that include this note, here.