None and done! "Talk the talk" left little "walk the walk" to do

The U.S. stock markets did it again. Scaring weak bulls and turning them into bears, plus making permabears a bit too braggadocio. The market shrugged off (seemingly) robust employment data, tensions in the Middle East, and rising yields (Friday).

So what?

While price action was constructive, indicating higher stock prices ahead, the consolidation period may continue.

Now what - Macro

Employment data looked more robust than it was. Appr. Nine hundred thousand full-time jobs were lost, and 1.2 million part-time jobs were created. In total, more than 300,000 new jobs were added. Stats and narratives look flawed if delving deeper. Wage growth was moderate. Excess funds acquired during the pandemic have seemingly been used up, and people return to work without demanding substantial wage increases (taking part-time jobs).

Now what - Technicals

Applying Elliot Waves, we may still be in corrective wave 4, subwave d, up. In this case, we may have reached the short-term top represented by the upper correction channel trendline moving downwards (see chart). A final move e, down to around 14300, could end consolidation wave 4, followed by the fifth bull move up later this year. We may also already be inside this impulse wave 5. In this case, wave 4 ended last week with a more straightforward a-b-c structure. Bull leg 5 may top around the old ATHs stretching as long as the 1st wave up (early 2023).

And now?

Technical indicators plus seasonality favor the latter count. Bad inflation numbers may end the bull quickly. If PPI and CPI confirm that inflation continues to decline, bears may have lost the battle for 2023! The recent strong performance of the R2K index and the current price action of rate-sensitive stocks, such as alternative energy, favor the bull. An extended war in the ME threatening Israel via a concerted action from Hamas, Lebanon, Syria, and support from outside may change everything. I cannot believe it, but if something like 1973 happens again, executed efficiently and cleverly, massive problems will be ahead.

Actions

I am in the disciplined bull camp. I think that we are in "none and done" mode as "talk the (harsh) talk" did a good part of the FED job; there is little "walk the walk left to do.

I still like the beat and raise AI plays (Super Micro, Nvidia, Vertiv). I like some cloud stocks (Confluent, Cloudflare, Mongo DB). Memorable plays include DraftKings, Symbotic, The Trade Desk, and secular growth stories such as Nu Holdings, Sofi (yes!), and Samsara - all up a lot this year.

New positions

I added Shoals below 16 USD yesterday (small position) and will add Israeli stocks on any meaningful dip. This may entail Monday.com and cybersecurity plays. Apart from that, we keep quite a lot of dry powder to buy once we have a new bull move confirmed (which still needs to be the case). We also hold our covered call positions.