After spending the month of April moving sideways and consolidating, the S&P broke higher in May and is attempting to initiate a new uptrend. By establishing support above the 200 day moving average, a case could be made that technically the uptrend is in force. We see significant resistance just above current levels which has the potential to extinguish the trend completely.
We note that the equally weighted index of the S&P is vastly underperforming the market-cap weighted index, and the Russell small cap index is remarkably weak. These are indications of a lack of participation and conviction. It would be wise to reduce equity holdings on strength.
Recent Program Performance
Intraday volatility remained low in May, resulting in the underperformance of the Diversified program which trades the intraday timeframe only. Fortunately June offered a resurgence in tradeable movement, and the Diversified program is responding well.
The Overnight Advantage program was designed to thrive in lower volatility scenarios when multi-day holding periods are warranted. This program is showing strong performance which we expect to continue.
The Blended program is averaging a 0.65% monthly return this year with very steady, low volatility results. We are satisfied to see this program create a conservative and consistent result by blending the two programs.
We see a good likelihood of the market making multiple attempts higher which are rejected by sellers getting out of positions at breakeven levels. Markets are very effective at drawing in participants before sharply reversing, and we would caution against establishing new positions at this time.
Sam Beckers and Dario Michalek
Soaring Pelican, LLC