The Seasonal Trend is about to push against the long-term Cyclical Bull trend. Which will win out?
For now, the major cyclical trend for equities remains higher and I continue to lean in that direction. But … as it relates to long-term focused core equity exposure, if you have yet to do so, I believe it is important to put a hedge in place by month end.
See graph below, S & P Seasonality During Mid-Term Years.
Risk of a 5% to 20% correction is high.
Although the longer-term cyclical bull trend remains in place, the Fed remains accommodative; sentiment and seasonal patterns support a correction. Further, this cyclical bull is aged and valuations are high, margin debt is at a record high and sentiment reflects a fairly optimistic investor.