We Just Hit All-Time Highs. I'm Getting Out.
The S&P is 18 points from the exact level where this rally dies. Here is why I am taking profits right now.
Three weeks ago I gave you three scenarios.
Scenario A: the S&P reclaims 7,000 and the bull market is alive.
Scenario B: the market makes a lower high and the trend has changed.
Scenario C: something in between.
On Friday the S&P closed at 7,165. A new all-time high.
Scenario A it is.
And I am selling.
Why I Am Selling Into Strength
This is going to sound backwards. The market just hit a record. Intel jumped 23%. Nvidia is ripping. JPMorgan just raised their year-end target to 7,600. All CNBC is talking about are the new highs. Your friends are bragging about their protfolios.
And I am taking profits and looking at a short.
Let me tell you why.
The Number
There is a number I have been watching. It is not a round number. It is not on the news. You will not hear it on CNBC.
7,183.
Before algorithms. Before screens. Before CNBC. There was a different way to read the market. Price and time. Geometry. Cycles.
7,183 is exactly 180 degrees from the March 30 low. That is where moves reverse.
It is also exactly 100 trading days from the November low. Two different tools. Same number.
And the timing is not random.
April 27 — tomorrow — is exactly 225 weeks from the January 2022 high. The one before the bear market.
It is also exactly 90 weeks from the August 2024 flash crash. Expect volatility.
The market closed Friday at 7,165. Eighteen points away.
I do not trade off any one tool. But I trade off confluence. When the price, the time, and the cycle all land on the same spot at the same time… I pay attention.
And right now they are all pointing at this week.
The Ceasefire That Is Not A Ceasefire
The market rallied because it believes the war is ending.
The war is not ending.
There is a ceasefire. It started April 8. Trump extended it with no deadline. He said he is in “no rush.”
But here is what is actually happening.
Yesterday, Trump cancelled his envoys’ trip to Pakistan. Witkoff and Kushner were supposed to go. They are not going. Trump posted on Truth Social: “If they want to talk, all they have to do is call.”
Iran is not calling. Iran’s foreign minister is in Oman right now. He is meeting Putin on Monday. He is going around the US, not toward it.
Iran’s Deputy Parliament Speaker said the Strait of Hormuz will “under no circumstances” go back to normal. He said that is a direct order from the Supreme Leader.
The US naval blockade on Iranian ports is still in place. Oil is above $105. Ships are being seized on both sides.
And in Lebanon, Israel and Hezbollah are still attacking each other — during a ceasefire that was extended three weeks ago.
This is not peace. This is a pause. And the pause is starting to crack.
The market is priced for a deal. But there is no deal. There is not even a meeting on the calendar.
The Trade
I took profits on my longs last week. The bounce from March 30 was everything I expected and more.
Now I am looking at a short. Tight stop above 7,200. If the market pushes through 7,183 level and keeps going, I am wrong and I take a small loss. That is fine. I always cut my losses fast.
But if the market stalls here — at the exact level the math says it should — and starts to roll over, the move down could be fast and ugly. The late April into May window is when the next test comes.
Here is what I am watching:
7,183 on the S&P. If it gets there and stalls, that is my signal. If it blows through and closes above 7,200, the bull has more room and I stand aside.
The ceasefire. If it falls apart — and it might any day — oil spikes, stocks dump, and the rally was the trap.
Bond yields. If the 30-year breaks above 5%, that is the crack. That is the one thing the stock market cannot ignore. Higher long-term rates choke everything — housing, corporate debt, buybacks.
The market just hit an all-time high. Everyone is celebrating. The banks are bullish. The news is good.
But the math says we should see a reversal… very soon.
I would rather sell too early than sell too late.
See you in the next issue.
*The elegance is in the execution.*
— Brian