Note: To the extent that I express my short-term outlook on markets, a sector or a commodity in my log entries, these are not to be the least bit construed as trade recommendations for the reader. They are, under present conditions in particular, subject to change without notice. What might appear to the reader as a viable trade idea today, could be something I’ll do an about face on — as new information presents itself — tomorrow, with no prior warning. I share excerpts from my notes only when I deem them useful in terms of helping our clients maintain proper perspective.


Equity futures are once again in serious rally mode this morning. The stated catalysts being an improving covid-curve, prospects for additional government stimulus and the perceived certainty of an OPEC/Russia oil deal this Thursday.

While indeed there were/are huge short positions to be squeezed during (and exacerbating) any strong rally right here, I fear this could turn out to be one of the worst bull traps on record.

Technically-speaking, prior to yesterday’s huge rally it appeared as though the 38% retracement level might serve as resistance to be retested weeks/months from now after the market — in classic bear market style — rolled back over to, at a minimum, test the first established low. With S&P futures now pointing to an 80-pt surge at the open this morning (the Dow +830), the 50% retracement level is in clear sight (see red dots on graph below).

In a rare warning (from a government agency) last evening, Korea’s financial regulator cautioned its consumers against chasing the stock market under present circumstances. I’ll be quoting them today on the blog. I, alas, have very little doubt that too many folks will end up wishing they heeded that warning…

There’s virtually no doubt that we’re entering what will turn out to be a recession that, at a minimum, rivals 2008’s; highly probable that it’ll turn out worse. That reality by itself — not to mention the stark lack of traditional support flows going forward; i.e., share buybacks and 401(k) contributions (as folks lose their paychecks and/or hunker down) — hitting earnings statements and outlooks in the months to come means that stocks make very little sense at present levels. I.e., the market is exceedingly dangerous right here…