Teak railings known as ‘bright-work’ on large yachts and cruise ships, at periodic points lose their sheen; so require a new coat of lacquer. Applying that varnish is a tedious process of sanding and preparation. So it is for the stock market this year. And first it has to take a ‘shellacking’ before the final coat of varnish can be applied.

  

In the meantime, as if to forestall routine maintenance (corrections), money managers often have resorted to seeking out value stocks (makes sense to a degree) in hopes of offsetting the decline in their overly-loved FANG+, or similar stocks.  

Rearranging the Titanic deckchairs is what that behavior has been and is; with realization that they overstayed the heavy long side of momentum and tech issues. You’re at the point of losing the 4th leg of the stool (tech) while the first three (Housing, Autos and Financials) are already gone as outlined quite often in the multi-month distribution process that preceded all of this.  

I’ll leave the text as brief as possible; with expectations that Midterms and Tariffs/trade continue to be a ‘cloud’ over this market. I mentioned Italy as well; and we have a key EU statement coming too.  

  

You also can report good earnings and not get a favorable response; mostly because they’re overpriced; the uncertainty about next year; and greed from those who have overstayed positions. So if or as they panic, that’s fine from the standpoint of what we’ve encouraged investors to guide them this year.  

In sum: that guideline was to lighten up sufficiently so that you’re positioned so that you’re ‘more excited about the bargains that will be created, far more than worried about further erosion in price of shares you continue retaining’.  

(I prepared the above chart last night but omitted posting it. Thought I’d just share it a day later, just for the realization of how long this cycle has been.)  

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