General Market commentary

What a strong ATH close to wrap up 2020! Although 2020 is a tough year, FED’s unlimited QE & rate cut pushed asset prices to a new record high. Wall street really need their big fat bonus check, don’t they? Anyway, as it is the year end, we want to give a long term perspective on the markets. Please read below.

Quantative market model signal

1. Midterm trend: moderately bullish

2. Midterm risk: high

Featured charts

This S&P 500 monthly charts clearly says we are in a secular bull market. However, it is worth noticing the megaphone pattern formed since 2018. Of course this is alone is not immediately bearish, but we need to be prepared to embrace elevated volatility as the new norm. This is also confirmed by this 20-ish strong VIX support level:

Ideally we want VIX to be compressed as much as possible. But Since the March 2020 crash VIX has been refusing to give up this 20-ish support. Refusing to die is a sign of life. This is another warning sign. Again, don’t solely act on it. In the end it’s the price that dictates. Please keep an eye on our market updates as we will try to alert dangerous signals for our readers ASAP.

For advanced readers, here is the VIX futures term structure. The flat structure isn’t an all-clear sign. However bull market thrives on fear, isn’t it!

Bonus ideas

Here’s the new year gift for our readers! We are grateful to have your support. Since majority of our readers are passive investors, we have picked some sectors and their corresponding ETFs for 2021/Biden presidency:

Please feel free to reply below with your questions and share our thoughts on social media! CL Capital is grateful for your support! Let’s start 2021 STRONG!!!