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Poor Jobs Report Gives Bulls A Reason To Charge 05-08-21

Summary:
As we noted last week, “Another reason we don’t expect a lot of upside to markets because the recent “consolidation” failed to work off any of the overbought conditions. Notably, the market remains more than 5% above its 50-dma, which is historically extreme. Such gets corrected, usually through a price decline or a consolidation.”  Our “sell signals” have kept us somewhat underexposed to equities and slightly overweight cash. However, the deterioration of “money flows” concerns us and aligns with hedgefund liquidations over the last several weeks.  Given the more extreme selling pressure and the current short-term oversold condition of the market, we have begun nibbling at exposures that we like. There is also a reasonable expectation we will start to see the major tech companies

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As we noted last week,

“Another reason we don’t expect a lot of upside to markets because the recent “consolidation” failed to work off any of the overbought conditions. Notably, the market remains more than 5% above its 50-dma, which is historically extreme. Such gets corrected, usually through a price decline or a consolidation.” 

Poor Jobs Report Gives Bulls A Reason To Charge 05-08-21

Our “sell signals” have kept us somewhat underexposed to equities and slightly overweight cash. However, the deterioration of “money flows” concerns us and aligns with hedgefund liquidations over the last several weeks. 

Poor Jobs Report Gives Bulls A Reason To Charge 05-08-21

Given the more extreme selling pressure and the current short-term oversold condition of the market, we have begun nibbling at exposures that we like. There is also a reasonable expectation we will start to see the major tech companies pick up a bid as managers look for positions with lots of liquidity as we head into the weaker summer months. 

As shown, we are continuing to run a “barbell” approach to portfolios by overweighting our inflation sectors and underweighting our deflation sectors relative to the benchmark. (60/40 index) We have a very short-duration bond portfolio, which is why our “cash” is overweight. (Primarily 1-3 year duration holdings)

Poor Jobs Report Gives Bulls A Reason To Charge 05-08-21

Once we get the next “buy” signal, we will adjust our weightings accordingly, but for now, we remain comfortable with our exposures. We continue to “tweak” the allocation as needed to adjust for risk as our intermediate-term concerns remain.

As David Rosenberg recently noted:

“The worst thing anyone can do is to extrapolate to the future. As Bob Farrell once said: ‘When all the experts and forecasts agree, something else is going to happen.’ The consensus has never been more lopsided, and that is reflected in asset allocations that heavily weight stocks relative to bonds.”

We agree.


The MacroView

Poor Jobs Report Gives Bulls A Reason To Charge 05-08-21 

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See You Next Week

By Lance Roberts, CIO


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Poor Jobs Report Gives Bulls A Reason To Charge 05-08-21


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Poor Jobs Report Gives Bulls A Reason To Charge 05-08-21

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Poor Jobs Report Gives Bulls A Reason To Charge 05-08-21


Model performance is a two-asset model of stocks and bonds relative to the weighting changes made each week in the newsletter. Such is strictly for informational and educational purposes only, and one should not rely on it for any reason. Past performance is not a guarantee of future results. Use at your own risk and peril.  

Poor Jobs Report Gives Bulls A Reason To Charge 05-08-21

Have a great week!

Lance Roberts
Lance Roberts has sharpened that lens with 30 years in the investing world from private banking and investment management to private and venture capital. Lance Roberts’ perspective and common sense analysis is sought after by media outlets such as Fox 26 News in Houston, CNBC, CNN and Fox Business News along with numerous publications including the Wall Street Journal, USA Today, Reuters and the Washington Post. Roberts is the Editor of the X-Factor report and publishes the blog Daily X-change.

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