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Market Direction Model - Model switches to CASH/NEUTRAL on April 22, 2020

Model switches to CASH/NEUTRAL.

U.S. stock markets can go a lot higher without retesting March but with sharp corrections along the way due to the realization of second order effects. The model will likely switch to a buy on a sharp pullback that stabilizes then moves higher. For now, the odds are roughly equal of a market that moves higher due to QEternity vs. additional second order effects which can pull the market lower.

The price of oil where the May futures went negative because of the lack of storage space is a recent example though appears short-lived as markets are heading higher once again today. Barring any unforeseen negative news beyond what is expected regarding COVID-19, a shift back into a messy bull market is more likely given nearly limitless liquidity. This level of liquidity is unprecedented in the history of the Federal Reserve. While the stock market plummeted the fastest in history over a handful of weeks, it is now skyrocketing also in near-record time, defying most all negative news. The discount and fed funds rates remain near 0%. CME Fed Futures expect this to continue out to at least a year, pricing in probabilities at 100%.

Expect the leading stocks which are the new alt-currencies to resume their longer term uptrends, albeit sloppy, along with the general market. Fiat will continue to debase so this is bullish for bitcoin, gold, and palladium, but the limitless liquidity has to go somewhere so this is also bullish for stocks and bonds. The Fed is already buying various bond-related ETFs as well as actual corporate bonds such as Ford so stocks and stock-related ETFs are likely next.
This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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