Talk About Riding A Roller Coaster

I have just been sold out of my one remaining position, somewhat to my amazement and fury. Since selling me out, the shares have rebounded 20pc (and much more – see below). Would you believe I was closed out of Palantir at $65.56. Fundamentals have gone out of the window, and the technicalities of a chart-driven liquidating bear marker have taken over. Leveraged bulls like me are being wiped out.

The man in charge at the White House is pursuing policies last pursued with disastrous effect in the 1930s. His voting support comes from people who don’t care what happens to other countries and think economics is something for pointy-headed intellectuals. The more the economic establishment reacts with horror, the more they like this Make America Great Again approach.

It feeds all their prejudices about foreigners taking advantage of hard-working, honest Americans. It is based on an older economic theory called Mercantilism that saw trade and economics as a zero-sum gain. In this view, you only win if somebody else loses, so screams of horror by foreign governments, even friendly ones, only validate what Trump is doing.

What a mess!

The chart of SOXL, three times leveraged to the performance of semiconductor shares, is plummeting, and the Coppock has become negative. In my analysis, this means the indicator is now in buying territory, and the next buy signal will be important. You may think, OK, it is in buying territory, but why commit funds until we do have a buy signal? It is hard to argue with that view, but history often shows that boldness in bear markets ultimately reaps substantial rewards.

There are two economic phenomena one should never forget – how high a bull market can climb and how far a bear market can fall. QQQ3 exaggerates the effect of stock market moves with its three times leverage and daily rebalancing, which produces great Coppock signals.

For a peaceful, profitable life, be fully invested after buy signals and consider going fully liquid when Coppock turns down. The most exciting buy signals are when Coppock has turned negative. So far, this has only happened once to QQQ3, but it may be about to happen again.

Strategy – Make Sure You Can Ride Out The Storm

Warren Buffett had a saying about bear markets. When the tide goes out, you can see who has been swimming naked. A collapsing stock market applies financial pressure and often ends with a major bankruptcy. So far, the rumours have not even started flying.

On the plus side, there is no sign that the technological revolution is proceeding at anything but warp speed, and it is being driven by US companies, names like Nvidia, Palantir, Coreweave and others.

TECL is another leveraged ETF where the Coppock Curve tells a vivid story. The indicator is close to becoming negative, which is an exciting development. Purchases of this ETF from now on are likely to prove profitable come the next turn in the Coppock wheel.

You could launch a $-cost averaging programme, investing regular amounts monthly and then doubling or trebling your position when Coppock turns higher.

Trump Blinks On Tariffs

Since I wrote the above, Trump has blinked on tariffs, triggering more incredible volatility. The Palantir shares I was sold out of by a whisker have rebounded by some 50pc at one stage. I was not happy, especially when, according to Trading View, I was sold out at a price that Palantir shares never reached.

I complained to IG who, after much research, found a claim by Bloomberg that the shares traded at a low of $65.40, presumably for about five seconds. It was especially galling because I had taken a decision that I was going to fund any margin shortfalls to protect my position and had already done this once.

The moral of the story is that in times of crisis, you need to flood liquidity into positions you want to defend to the death. The market makers are tricky, and they want to flush out sellers when a stock is falling sharply.

Strategy – Toss A Coin

Shell-shocked investors may conclude that the only decisions to take in this market are no decisions. Even God probably doesn’t know what Trump will do next, though in the end, markets do decide.

Since MAGA-man took charge, the dollar has lost 10pc of its value, which may not be exactly what the great man intended.

Great companies don’t stop being great because of turbulent markets. The long-term outlook for US shares is likely as good as ever. In the short term, anything can happen, but by the summer, Coppock will likely be turning negative all over the place, setting the scene for some massive buy signals.