A Bottom, but not the Final Bottom?

On further review this evening, I think the numbers look bad enough today that we probably saw a short-term bottom. From here, I think we bounce before we retest today’s low in a month or 2. That retest could come at a lower level, perhaps in a range of a couple percent lower up to 10% lower. Alternatively, there could be a higher-low without a qualifying retest. It is doubtful that we’ll go up without some sort of decline to near today’s lows, but I suppose there is a low probability that it could happen.

 

In a worst case, the Bears are right and the retest fails and markets keep going down. At this point, I don’t think so. The virus has an end – we just can’t tell exactly when.

 

My plan is to wait for the retest before I re-establish a normal stock allocation.  By then, we should have better information. There is risk here too; it is possible I won’t be able to identify the bottom and markets leave me behind.

 

In the meantime, I took a small 2xS&P 500 position at Monday’s close. In addition, I may increase the trading position depending on market action Tuesday. Overall, any trading position will be small…less than 5% of the total portfolio. I’m not a big trader.

 

Futures are up a little more than 2% as I write this.