Giving trading advice, buy and sell recommendations, and stock picking are conversations we avoid as there are so many professionals in this space. More importantly, people study markets and formulate their own opinions and trading styles – which we encourage.
However, we like long-term macro indicators and every three to six months, if there are changes in said indicators, we just report the facts. Currently, with the US China trade talks, North Korean summit in doubt, and the FMOC indicating a temporary period of allowing inflation to rise above 2.0 percent, does it make sense to be a tad more cautious about this US equity rally? Does the Dow look tired? and is it safe to expect a short-term but possibly deep correction lower? The answer could be YES.
In the final days of May and into early June, between May 25 and June 8, US and by extension, global equity might reprice lower, surprisingly lower from a purely technical point of view (with other factors adding fuel). We are not suggesting trades but are cognizant of tired and frothy equity markets that, with a small amount of pressure, could fall quickly.
Of course, if the Trump-Kim Summit does take place, this would be a boost for equity markets but a postponement, the Kim family has done it many times before, followed by any negative Fed news or bond market concerns, could tip markets. The Dow, S&P and specifically Tech names, could come under immediate pressure.
Tech names are a growing concern – tired and slightly influenced by politics.
The Bay Area and its perceived political bias and overreach are now being questioned by political pundits and investors alike. There are many other factors, including pure technicals on said indices, especially the major tech names, so we focus on caution.