Is The Bounce Over?, A Look At Reopen Value

Two weeks ago, on Saturday March 6, I announced “The Bounce Is Here” based off of the intraday reversal on Friday March 5. At the time, I believed that the bull market was over but that bulls would stage a ferocious rally on the premise that this was another buy the dip opportunity in an ongoing bull market.

Bull, Ox, Bovine, Zebu, Cattle, Raging

I played the bounce via a 10% position in the Ark Innovation ETF (ARKK) from Monday March 8 through Thursday March 11 (scoring a nice profit) when I flipped it short (15% of Long/Short portfolios) along with (QQQ) 7%, (SMH) 7% and (IWM) 7%.

This Thursday I was rewarded when 10 year treasury yields surged above 1.7% overnight in Europe and into the US session in the wake of the Fed’s dovish stance, pummeling stocks. Which raises the question: Is the bounce over? This question presupposes that the move from Friday March 5 through Wednesday March 17 was just a bounce. While that hasn’t yet been confirmed to the extent I need to see by price, that is my interpretation and, obviously, Thursday’s action lends weight to it.

Technically speaking, the QQQ, my proxy for what I call Mega Cap Growth, and ARKK, my proxy for what I call Speculative Growth, did not repair the damage caused by the three week selloff that started in mid-February. A number of bullish technicians tweeted anxious NASDAQ-100 charts yesterday (Friday).

The category that has not rolled over yet and has been carrying the market is what I call Reopen Value. (The final category that I break the market up into is Defensive Value but these stocks by nature underperform during bull markets and hold up well during bear markets; they cannot lead a bull market). The IWM is my proxy for it and while I realized that I’d shorted it prematurely two Thursdays ago, I held on to it on a gut instinct that it is topping as well and got lucky during Thursday’s drubbing.

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