The Market Ahead #3
Market Dump, SpaceX IPO, and more
I reduced a good amount of risk over the week and consolidated my positions to just Micron and Google. How I see it, the markets sort of showed its hand today, seeing a market wide dump for seemingly simple news.
Overall, I think the job and Broadcom news mattered less than the upcoming SpaceX IPO. It has become clear that fund managers are pulling liquidity out for the launch, and it makes sense that they would pull out of their winning trades.
I often say it’s not the news that’s important but how the market reacts to it. I wouldn’t bet against the trend yet, but I do think trying to hedge your risk here or consolidating your positions makes sense.
Is the AI trade over?
I think it’s too early to tell right now but the market’s reaction on Friday was one of the first signs of fragility we have seen in a while over reaction to the news. I would expect more chop going into the SpaceX IPO. I don’t think the trade is over. Don’t bet against the trend until proven otherwise, but if you are already up a lot it makes sense to figure out your risk here.
BTC Pain
More pain for Bitcoin this week as we touch the $60k base. I expect some relief into $63-68k next week since we are currently close to 3 sigma levels, but we could also get a much smaller recovery which would be even more bearish since it signals a lack of bidders. I remain bearish until we recover the trend.
Let the Market Figure itself out
I think this is one of my favorite quotes that I think about a lot. When you are feeling lost in the markets, sometimes it’s best to just wait and let the market figure itself. Capital preservation is always the most important. Never stick too close to one belief and adapt to the market when you see the winds change.