Hey, Ross here:
Is the selloff over after yesterday’s big green day?
I’ll explore that question later in this newsletter.
But let’s start with a different question.
Given the fact that there’s a literal war going on…
Why hasn’t the market fallen further?
Today’s chart gives one answer.
Chart of the Day
Take a look at this chart from Goldman Sachs.
It shows the global long/short ratio – in simple terms, how much money investors have on the long side versus the short side.
And right now, that ratio is sitting near the lowest level in 15 years.
What does that tell us?
It tells us this is a very well-hedged market.
In other words, investors aren’t recklessly bullish.
They’re long some stocks, yes – but they’re also carrying a lot of short exposure as protection.
And that helps explain why the market hasn’t fallen further.
Because when positioning is already this defensive, there just aren’t as many unhedged investors left to panic-sell.
A lot of the caution is already there. A lot of the downside protection is already in place.
That doesn’t mean stocks can’t fall.
But it does mean this market is much less vulnerable to a full-blown collapse than it would be if everyone were leaning aggressively long and unprotected.
And that’s good news.
Because it’s probably why we haven’t slipped into a bear market, which as the data shows below…
Often starts with sharp, fast moves – not the slow grinding down we’ve seen this time.
Like I said, it’s good news.
I don’t see this turning into a bear market (though anything could happen).
But let’s go back to the earlier question.
After yesterday’s big up day –is the selloff over?
That leads to today’s insight below.
Insight of the Day
Do not overly rely on single-day moves.
Especially when volatility is as high as it is now.
Of course, like anything in trading, there are always caveats.
Sometimes, the single-day moves are so large that they DO tell us something reliable about the market.
For instance, the 10% “Liberation Day” selloff in April last year.
That was such an outsized move – after weeks of the market grinding lower – that I knew that it marked the bottom.
We have not seen such moves lately…
So I would caution against looking at yesterday’s 3.8% move in the Nasdaq as an “all clear” sign.
Single days are not enough to form trends.
And if you want to see what trends I’m seeing – not just in the broader markets, but in the individual sectors…
Not to mention the opportunities within these sectors…
Then join me every week as I go LIVE to break down what I’m seeing in the markets in real time…
As well as highlight underrated opportunities most are missing.
The good news is, as part of our Easter special…
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And I look forward to seeing you in my next live session.
Customer Story of the Day
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The live weekly training and Ross’s knowledge of the way stocks move is great, he gives excellent diagnoses of stocks discussed.
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Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
