Meta Strategy Trading Portfolio – Probability Map Update.

A Mind-Boggling Rally

In the beginning of April panic gripped financial markets as “the end of American exceptionalism” via the destruction of globalized free trade became the #1 narrative causing international investors to flee all U.S. assets in droves.

Extremes in pessimistic sentiment and positioning heralded near-term sellers exhaustion and a stock-market recovery, which has morphed into a monthly reversal of historic proportions by now.

Recent data based on market breadth and breadth thrusts does strongly support the view that the worst may already be behind us.

However, the slow-moving, real economic damage caused by destructive policy cannot be ignored.

Should the U.S. economy fall into recession, it could easily override those signals of strength.

A large rally off the panic bottom by itself is by no means an indication that new highs are imminent and we should expect at least a significant drop to a higher low as buyers are likely to become exhausted soon.