Overnight Relief Valve
Over the past few weeks it seems like most of the overnight S&P sessions have seen a big decline between 6:30 PM and 6:30 AM in the morning. This selling has been constructive for the markets, ridding excesses and allowing it to slowly move higher. We are watching for a period of three or more days when the overnight sessions see big run-ups. That will be an early indicator that the market has moved into a period of excess.
One has to keep in mind that this rally since last October has been based on hope, hope that keeps being acknowledged with changes of a somewhat radical nature in the approach to a recession/depression. At some point the market will have to start dealing with reality and no one knows what that will be at this point. We don’t believe that first quarter earnings are the reality that will tell us anything. It is just a transition/cleanup quarter. The next two quarters will have much more information on which to base valuations.
The EMA ETF Fund Nav was 1119 at Fridays close.
8:22 AM CDT