Market Whispers - Bruh, at least give me a sign!
Markets: Beachman's portfolio tactics based on his read of the markets
Over the weekend, I write about how I am interpreting recent market signals and what they mean for my portfolio tactics going forward.
We, investors, are human beings…with aspirations and emotions. When markets don’t perform like we expect them to, we sometimes stress out about things.
This week, I was stressing a bit…why? Because my portfolio has a high cash allocation, the rest of my holdings are about 38% hedged…and the markets kept rising and rising…for 9 consecutive days…the longest streak of positive days in more than 20 years.
Volatile markets are constantly testing our plan, our conviction, our analysis, our thesis. Some of the most violent up surges happen in bear markets. During the dot com market collapse, more than 13 times the NDX rallied between +8 to +19% in a single day!
I had identified three triggers to change my ST market thesis. If at least 2 of these 3 hit then I would remove large portions of my hedges and look for opportunities to go more long i.e. deploy some of that cash.
Well, as of Friday’s close, only one of these triggers fired. Markets were close to pulling me to the bullish side of the boat, but they came up short…
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Table of contents
Overall market conditions
Beachman recommends
Beachman’s portfolio stance
Important dates
Market signals
Beachman’s plan
Overall market conditions
Trend: Trying sustain the recovery.
Risk level: Very high.
Investor sentiment: Fearful. Was neutral for only 1 day and then turned fearful again.
Beachman recommends
Each week, I share a recommendation for an app, a book, a website, a podcast, a publication, a movie…anything that I find interesting and useful from an investing and financial management perspective. I don’t get paid to do this. Beachman’s Newsletter has and always will be an ad-free publication. So here goes…
Macro Voices
There are a handful of podcasts that I listen to regularly and as soon as they are published. Macro Voices’ weekly podcast is one of them. It is produced by Erik Townsend, a retired hedge fund manager, and Patrick Ceresna, a market technician. They bring on some of the smartest guests who can help me understand what is happening in global markets - stocks, bonds, commodities and currencies. Macro Voices is published on You Tube, Apple podcasts and on their website at www.macrovoices.com.
Beachman’s portfolio stance
62% long. 38% hedged.
Focused on establishing my hedges.
Trimming and raising cash in line with my 2025 market roadmap.
2 medium term trades in place (See current trades at Beachman’s Salty Trades).
Important dates
May 5th - ISM services report.
May 7th - US Feds interest rate decision and press conference.
May 13th - CPI retail inflation report.
May 15th - PPI wholesale inflation report.
May 16th - Monthly options expiration.
For short term trade ideas, check out Beachman’s Salty Trades.
On the daily, you can find Beachman in four places…
Beachman’s Substack chat line here
Beachman’s Substack feed here
Beachman’s X feed here
Beachman’s Threads feed here
Please check out the must-reads listed on the About page and the Roadmap page.
Market signals
The SP500 has clearly broke through a downward trend line. It is above the previous 5,500 resistance level as well as its 50DMA. These two levels could now act as support. This index could go higher until it hits resistance at 5,750 or the 200DMA.
But then, daily volume is still tepid with many key stocks flagging overbought and overvalued signals. A downside reversal might be closer than we think.
The Nasdaq is trying to break through its 200DMA. This could happen next week. However, the lower daily volume and the overbought signal could spell trouble.
I continue to see extensive speculation in high-beta stocks…names like HIMS, MSTR, PLTR, TSLA, APP, RGTI etc. Most of this activity is short term trading…for that day (0DTEs) or for the week. The vast majority of the growth stocks on my watchlist are now overbought AND overvalued. These are not signs of a healthy market - think back to late 2021 or even as recent as Feb 2025!
Small caps broke above their 200WMA and 50DMA and just triggered a Buy signal on my chart. But they have a long way to go before taking back that 200DMA. Daily volume is weak on strong overbought signals. Translation: A reversal could be close.
Bitcoin could be running on fumes and stalling in the mid-$90k. Daily volume is down significantly. Those MAs are all pointing upwards which could signal that we could stay at current levels for a little while longer.
Notice a running theme here? Most indexes are overbought. Many stocks are overbought and overvalued (considering their forward growth prospects). All of these put together are ripe for a move lower.
However, markets have shown time and again that they can stay irrational for longer…that they could do stay higher for longer.
Additionally, now that more than 70% of SP500 companies have reported their Q1 earnings. Those with share repurchase programs are out of the black out period and now free to buy back their shares in the open market.
Given all of this….this is why I have identified 3 specific triggers that will help me decide when I need to shift my portfolio approach. We are at 1 of 3 signals today…
What else am I watching?
As expected, we are now starting to see signs of macro cracking:
Q1 GDP came in at -0.3% versus a prior reading of +2.4%…quite a sharp decline.
The ISM manufacturing index reported lower than expected activity and is at contraction levels for two months in a row now.
MCD, CMG and SBUX - all three food and beverage companies reported a drop in consumer traffic and spending. Recent credit card data from BofA showed lower spending on dining out, going to the movies, travel and leisure. LendingTree reported that 25% of BPNL installment payments users are using them to buy groceries +78% yoy and 41% of all BPNL borrowers are late on their payments.
Jobless claims are ticking now higher.
The US added only 177k jobs in Apr…much lower than the average over the past 4 years. Even the Mar jobs number was revised lower by -19%.
YTD, US employers have announced over 600k job cuts, according to a report released by Challenger, Gray & Christmas, Inc. More than 275k of these cuts came in the last month itself. Even these numbers could be under reported.
Oil and copper prices are lower, perhaps signaling an economic slowdown is near.
Recent reports show a sharp -64% drop in imports volume into the US and -49% global shipping volumes.
CNBC reported that factory activity in China dropped to a 2-year low in April.
Here’s one more…last week, the brokerage firm Schwab made thousands of margin call warnings to their retail investors. This is very reminiscent of 2022 when retail investors found themselves well past the end of their FOMO skis in growth stocks, in SPACs and in crypto.
There has been lots of front running of tariffs...pre-ordering of goods from manufacturers, consumer stock piling in anticipation of higher inflation, inventory building of raw materials and parts by businesses etc. This early “high” seems to be tapering off. I have a lot more to write about this…coming soon.
Beachman’s plan
So what’s my plan in all of this?
Some of my best thinking happens when I am away from the desk doing something physical and mindless. This weekend, I carried about 800 lbs of mulch to various corners of my yard.
Mulching = clarity of thought.
So here is how I plan to move forward…