FireWeatherMet Account Talk

[FireWeatherMet]

While I HATE exiting at a recent low, I have decided to use my 1st Nov IFT exit my full stock investment mix (of C,S, and I) and go 100% G today.
When we had a late day reversal Friday, the usual pattern would be a big bounce Monday with follow thru to a new high in the coming days/weeks.

When that did not happen Monday, and markets continued to fall bigtime Mon AND Early Today, it told me there is something inherently wrong with the market...AI Bubble and other sectors being overbought being the most newsworthy. How low can we go? Well we're actually hitting the "Carboni Proprietary MA level" near 88 day MA but its been 7 months since we hit the 200 MA and even that back in the spring was artificially created by Tariffs. I'm worried that we could be seeing more of a "natural" structural bubble in the market based on AI, as well as the masses of layoffs we've seen in the past few months,. In addition, analysts, as well as the FED, have no reliable economic data since the shutdown, and experts are saying even that data is questionable, given the "Regime" firing of anyone who doesn't report a "Rosey Picture". Being that I'm getting into the last few years before retirement, I'm into wealth preservation a lot more than before. If I'm wrong, and we reverse course later today or tomorrow, I still have a 2nd IFT to get back in...but it will depend on what would be fueling any reversal, as dead cat bounces can always occur when there is more pain to follow. So leaving position of 25% C, 25%S, 50%I and going 100% G COB today.

 

[FireWeatherMet]

Well, after exiting for the G Lilly-pad 2 days ago with 1st Nov IFT, I was always planning to use my 2nd IFT to get back in if we get the "All Clear".
With the blockbuster Nvidia report after hours yesterday, I thought that time was today, but as I was busy checking financial news, and keeping an eye on the charts every few minutes, the sharp drop about an hour b4 our IFT deadline caught my eye. It confirmed my suspicions about this market, that its not just NIVIDIA/AI, since small caps have led our downturn, but more the fear that there is something more significantly wrong with the markets current structure. Biggest issue, is ironically "good news" about more robust jobs report than expected. However, this report makes a Dec rate cut unlikely, as well as inflation rising from 2.9% to 3%. Market has been pricing in a slow but steady rate cutting trend , and now thats in a bit of jeopardy with decent jobs numbers and a slight rise in Inflation the past month.

An even more worrisome issue is the "uncertainty" of the economic data now, since POTUS fired the BLS person in charge of reporting jobs numbers, after a bad jobs number over the summer. Biggest worry here is that "true" bad jobs numbers are being fudged by fictitious "good numbers" which makes rate cuts less certain. So keeping "My Powder Dry" in the safety of the G for now.

Below...the key charts showing the sharp late morning fall (and sharp rise in the VIX).
NIVIDIA giving up all of its early gains. S&P Falling Sharply...VIX Rising Sharply:

 

[FireWeatherMet]

Sorry for not posting sooner, but has some work issues right around IFT time. Using 1st Dec IFT to shift full equity allocation (50%I, 25% C, 25% S) and go 100% G COB today.

I checked my email and got a confirmation they received my request, to avoid the snafu with my previously attempted IFT, lol.
Much of the recent economic news has been rather bleak, and the only thing propelling the market upward recently, seems to be the "Anticipation of Rate Cut" and resulting "FOMO". However, in the past, this has often resulted in a "Sell the News" move that is opposite of what the recent days trend has been.

Another thing is the charts...zooming out (1st chart) seems the S&P is trying to form a top...although one can easily make the argument that its an "Inverted Head & Shoulders) which is usually bullish. However, zooming in, there are some "Open Gaps" on the S&P that could easily get filled with any "Sell the News" movement in the coming days. Especially if we get a rate cut, then the Fed says they will go to a more "wait & see" approach in their comments. So will hopefully lock in whatever gains we get today (hopefully they will be gains), unless the fed says they are not cutting, in which case getting out now would still be the right move.

Still have another Dec move to get back in if my thought process, is all wrong.

 

[tsptalk]

Well, right or wrong, the Fed gave you a nice parting gift today.

 

[FireWeatherMet]

Moving back into equities today, we've been in a downtrend, which I avoided most of, and somehow, surprisingly, found myself in the Top 5 on the Tracker this month. There are some large open gaps way down below, from many months ago, but most of the big economic news that could drive the market lower has already come in, including the latest CPI coming in a little cooler than expected.

Markets are up today...although it is a "Triple Witching Day" according to the CNBC anchor I was listening to earlier this morning, so we'll see if it holds. But either way, will jump back into stocks, with more weighting in the I but with a toe in all the waters, and see if I could catch a ride up on the statistical "Santa Rally" the next few days.
Leaving 100% G and going 30% C, 30% S, 40% I COB today

 

[FireWeatherMet]

Well, after attempting to chase the so-called Santa Rally, I wasn't very impressed, and will burn an IFT to lock in Dec gains of just under 2% and exit back into the G-Lillypad COB today. Normally I don't like to exit at the end of a month, esp after a few small down days, because there could be a short term reversal back upward for early the following month, but the lack of a Santa Rally, a near certainty of no rate cuts for January and more importantly several open gaps down below (see attached chart) make me more cautious going into the next few weeks. On the other hand, there are some reasons for more upside (see Tom's latest daily commentary), but I do fear we could continue to go lower, before heading back higher.

Another thing....there is an open gap from many months ago that would send the S&P well below the 200 Day MA and we have not visited the 200 EMA for 8 months now, and even that was kind of artificially created by Tariff initiation and DOGE shockwaves in the spring of 2025. So while I doubt it, its not out of the realm to see a bad downturn in January to that open gap below the 200 EMA. If that happens, it could represent a great buying opportunity. But as always, if my hypothesis is wrong, I'll try to stay nimble and buy back in...we'll see. Good luck to all of you in 2026!

 

[tsptalk]

The first few days of a New Year are always interesting and confusing as they have been doing the opposite of what they used to do -- give you a good idea of what's coming in January.

In 2023 the S&P started down for the first three days, ended the month positive.

Same in 2024

2025 was one big whipsaw that first week or two.