Market whispers - Pivoting through 2025's potholes
Markets: Beachman's portfolio tactics based on his read of the markets
Markets closed with a negative tone on Friday. Looking at the fintwit headlines, one might say, “but Beach, the indexes gained for the week”. But then, Beach would say “Go back to Dec and read this post about my marbles theory which is still happening in today’s markets.” Then look at the closing prices for the mega cap stocks. Some up for the day and others down...thus pinning the market in a tighter range.
Behind the scenes, there was more bearish positioning or one could say bearish re-positioning by traders. They decided to go into the weekend with more hedging in place...aka...buying more PUTs and selling CALLs. They are now worried about earnings and the US Feds.
Next week is a big mega cap earnings week - TSLA, MSFT, AAPL, META along with IBM, NOW etc. Top that with the US Feds’ Jan meeting, interest rate decision and press conference on Jan 29th.
This is why markets were tentative into the weekend. No one is sure about what to expect...many are nervous and markets are holding water hoping for good news.
I am in SE Asia (Thailand and India) for a few days and loving it! People, food, culture, history, colors, hustle, bustle…the dynamic energy of the region has to be experienced first hand in order to truly appreciate it. WSJ, FT and Economist can never do justice in a few printed words. The youth here are extremely driven to better their lives and businesses are constantly innovating…solving everyday use cases.
e.g. I was able to get a full range of healthcare lab tests done for $21. The lab technician visited me where I was staying and delivered all 65 test results in 24 hours. I received a PDF that was double checked and certified by a doctor…everything completed via Whatsapp.
However, Asia has some massive potholes - both literally and figuratively. Most drivers have become adept at navigating through these axle busters.
Similarly, for us, 2025 will be the year of some rather nasty market potholes and as investors we need to be ready for them. In the Beachman community, we don’t just hope that they will disappear. We setup our portfolios to minimize the risk of hitting them head on.
After pondering and watching how things are developing under the new regime, I have started framing my 2025 portfolio management plan into more actionable detail. I will start sharing these ideas and tactics now. See more below…
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Table of contents
Overall market conditions
Beachman’s portfolio stance
Important dates
Market signals
Beachman’s portfolio tactics
Bottomline
Overall market conditions
Trend: Pushed into a narrow range and a possible double-top
Risk level: Medium
Investor sentiment: Neutral
Beachman’s portfolio stance
Mostly long.
Some shorts in place (See current trades at Beachman’s Salty Trades).
Buying specific dips.
Important dates
Jan 29th - US Feds interest rate decision and press conference.
Jan 29th & 30th - Mega cap stock Q4 earnings reports.
Feb 21st - Monthly options expiration. About $350B in volume. 4x bullish CALL options versus bearish PUT options.
For short term trade ideas, check out Beachman’s Salty Trades.
On the daily, you can find Beachman in three places…
Beachman’s Substack chat line here
Beachman’s Substack feed here
Beachman’s Threads feed here
Please check out the must-reads listed on the About page and the Roadmap page.
Market signals
As expected, the SP500 recovered on Tue to get back into a BUY signal. After 4-5 weeks now, there are more stocks above their 200dma and 50dma than below those moving averages…a more positive market character setting in?
It would be been all good if Friday had been less negative as I described above. We might be hitting a double top moment around 6,100. Options traders have pushed the index into a narrow trading zone between 6,090 and 6,140. Now markets have to choose a direction….up or down?
Nasdaq is in a similar situation…hit the BUY signal, while threatening to double top around 540.
Small caps are still trying to go higher, but they seem trapped below the 50dma because of high LT interest rates.
The US$ (DXY) and 10-year LT interest rates relented a bit this week however both could climb back up if Chair Powell is hawkish at his press conference. There is a growing feeling that he will put up a strong front to any rate cut “demands” from the new US administration. Last month’s dot plot forecast showed fewer rate cuts in 2025. I would be surprised if he changes his tone so quickly now.
Finally, Bitcoin is also possibly double-topping. We got news of crypto regulations in the works…including the setting up of a US federal crypto strategic reserve. This could prove to be the ultimate sell-the-news event. When US senators are posting laser-eyed portraits on Twitter…you know that it is perhaps time to sell a bit and log gains.
What else am I watching?
As expected oil prices dropped and could do even lower.
Dr. Copper is still directionless…seeking growth in China or the US or Middle East rebuilding.
This post is now long in the tooth.
My rule is that I want you to be able to read this while waiting for your coffee to brew or your Uber to arrive. I don’t write long white papers…I focus on actionable thoughts and ideas. “Actionable” being the key operative word here…information that will help you decide what you need to do with your own portfolio given your life situation.
Here is my rather simple but actionable portfolio management framework:
Themes → Picks → Risks → Hedges → Speculation
So, let’s take a break here and continue the discussion in my next post where I will go deeper into my portfolio tactics for 2025.
Cheers.