Thoughts on What Comes Next

Special Update.

On Friday March 14, our Core Models turned up from a potential major bottom — triggering a Buy for Stocks.

I wrote this was “developing one of the best potential opportunities of the year”.

This was a significant change in my thinking.

Since late 2024, I had been concerned with Tech, Semis and Small-caps [October note, November note], and (fortunately) managed to sidestep most of the recent Stock market volatility.

But conditions finally reached a point where a contrarian Bullish view looked interesting again.

The consensus narrative from late 2024 fully reversed, and now most investors have come to think U.S. Stocks are “done”, it’s the “End of American Exceptionalism”, and China and Europe are the place to be.

Never mind the last century of market history… or where the majority of the world’s future innovation is most likely to come from in the next several decades… no, America is finished. It was a good 249-year run.

And so, the best opportunities come when investors begin to question the long-term prospects of investing, and become collectively short-sighted.

This type of signal *and* sentiment setup doesn’t come around often, so it has our full attention.

In my view, this remains one of the most important decision-points of the year.

Which is to say: hard times are when good decisions really pay off. And there are many good decisions to be made here.

On Saturday March 15, I emphasized:

In very rare circumstances (such as now), the combination of negative Gamma and extremely low liquidity, with Core Models turning UP from historic oversold conditions, is the perfect setup for a V-shaped rally. We’ll see if the market reacts.

Soon after, we saw critical strength *confirming* clear leadership in Tech — which had been abandoned despite a relatively “normal” correction. (*Down -16% from the highs, compared to -20% in August 2024, for comparison).

Slowly but surely, the leaders began to show themselves again — while consensus was looking for more downside.

At the time, I showed how investors panicked and rushed to cash, and made the case that:

A lot of money could be locked out if Stocks rally sharply here.

And now, with this week’s big opening gap up — a lot of investors could indeed get left behind.

It’s only Wednesday, and the consensus on X is a mixture of (1) arguing for a pullback, (2) openly selling into strength, (3) shouting nothing has changed, (4) saying investors should wait until the uncertainty clears.

This is why we don’t buy opinions or narratives. We buy strength and what’s showing leadership potential.

Trying to think one step ahead, let’s look at what’s happening and continue asking “what could be next?”…

Looking through the signals, I’m thinking of a few scenarios which could have major impact on portfolios for the next months, and MAYBE the balance of the year…