“Unprecedented methodology of analysis”

Given that the S&P 500 has ral­lied more than 42 % since its March 23 low that loico was the first to pub­licly iden­ti­fy as the like­ly mar­ket bot­tom,1 that the index has regained in a con­vinc­ing man­ner its 200-day mov­ing aver­age and that the NASDAQ 100 has even touched its pre-COVID-19 high, we can now declare with a good con­science that loico’s first mar­ket call, some­thing we said in our “Welcome” text we would make from time to time so as to show­case the pre­dic­tive pow­er of actu­al log­ic, was cor­rect.

After being briefly out of the mar­ket because of a clear­ly over­bought con­di­tion, we just re-entered the S&P 500 futures a frac­tion of a point below our exit lev­el of 3120.25. The short-term bal­ance of risks, in our view, judg­ing by the market’s observ­able micro-behav­ior, con­tin­ues to be tilt­ed towards the upside, so we aban­doned our plan, for now, to re-enter about two per­cent low­er. We would not be entire­ly sur­prised if the S&P 500 were to rise anoth­er 200 points, to about 3325, fair­ly quick­ly from here. This kind of assess­ment by a trad­er is a pre­dic­tion in the fol­low­ing sense: Either the mar­ket will quick­ly move in the hypoth­e­sized direc­tion, or, if it does not and pos­si­bly even does the oppo­site, the entire con­stel­la­tion will still prove such that we will be able to exit the posi­tion tak­en with­out a loss, because the mar­ket will revis­it the point at which we entered. Gain – or no loss, result­ing, on aver­age, in gains over time. Trading is that “sim­ple” in the end. As always, loico does not give invest­ment advice. What we write about finan­cial mar­kets serves two pur­pos­es only: to help our read­ers improve their log­i­cal think­ing in gen­er­al, and the way in which they cog­ni­tive­ly approach finan­cial mar­kets in par­tic­u­lar, and to demon­strate that log­i­cal think­ing can bring about extra­or­di­nary suc­cess.

With regard to the cur­rent sit­u­a­tion, we found the fol­low­ing view expressed by John Stoltzfus, chief invest­ment strate­gist and man­ag­ing direc­tor at Oppenheimer Asset Management, some­what cor­re­spon­dent to our view that we have in part already expressed on March 24, and we share it here:

“When we look at this week, we’re remind­ed very much of the ral­ly that start­ed in March 2009 … .

What we’re see­ing is the mar­ket is look­ing … ahead, 3 months, 6 months, 12 months out …

We’ve nev­er seen a sig­nif­i­cant por­tion of the largest econ­o­my in the world shut­tered as well as oth­er economies around the world shut­tered, and what that would look like com­ing out … I think it almost calls for an unprece­dent­ed method­ol­o­gy of analy­sis look­ing for­ward.”

Which lat­ter sug­gests the gen­er­al ques­tion:

Does sci­ence stop where the “unprece­dent­ed” and pos­si­bly non-repro­ducible starts? Or is sci­ence not called upon, in emer­gen­cies such as the one COVID-19 has appeared as for months, to derive action plans ad hoc direct­ly from log­ic instead of wait­ing for stud­ies to obtain “direct” evi­dence in addi­tion to the indi­rect evi­dence that log­ic draws its con­clu­sions from, when wait­ing risks or even out­right accepts that the stud­ies will be com­plet­ed when the emer­gency is over and the dam­age done? The dead from COVID-19 we sought to pre­vent with our arti­cle on March 16 will not wake up again, and the biggest stock mar­ket gains from the recent bot­tom have now been made – or not, by those choos­ing “to wait for (direct) evi­dence” instead of rely­ing on log­i­cal think­ing.

Addendum June 5, 5:14pm CET

So now it appears we know what was “brew­ing” in the market’s micro-behav­ior we had observed: 2.5 mil­lion US jobs gained ver­sus a con­sen­sus expec­ta­tion of 8.3 mil­lion lost, the biggest upside sur­prise in his­to­ry. It seems, thus, that in oth­er than triv­ial mat­ters, it rarely pays to lis­ten to the “main­stream” – just as it does not pay to lis­ten to the WHO in a health emer­gency, it like­wise does not pay to lis­ten to Wall Street ana­lysts. We shall find out, over the com­ing months and years, whether it con­tin­ues to pay to lis­ten to loico.

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  1. https://loico.com/why-we-have-likely-seen-the-bottom-of-the-corona-crash-in-the-us-stock-market/[]
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After it has come to light that “Black Lives Matter” is a marxist – and blatantly racist – organization that could not care less about equal opportunity but that, according to rally signs exhibited by “activists”, simply wants to “kill” or “eat the rich”, now the climate change scare appears to be crumbling to pieces as well: It appears we now have the Edward Snowden of climate change alarmism.