Having felt bruised and battered through the whole of Q4 2018, the thought of getting “back in the water” is one that brings with it a certain amount of trepidation. But if I feel like that then I am likely not alone; far from it in-fact.
Markets are repairing; human nature says we will ignore it for a while longer but it is definitely happening. I like to keep things simple: the 200 day moving average of the S&P 500 (red line below) never actually turned negative; the 50 day moving average clearly did (blue line below) but how much damage was really done? What is interesting is the 50 day moving average has stopped falling and is actually flattening; is the next move up or down?
Given that, so far, results season has seen companies generally producing results that are in line or not as bad as expected and rallying as a result (with the exception of defensives), it is likely markets have bottomed, at least for now.
So whilst getting back in the water is uncomfortable; the fact that there are 489 species of shark and only three of them have fatally attacked humans 10 times or more in history; the chances are the water is one of the safest places to be; so let’s buy some equities.
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