SPX My thoughts in balancing my view

The longer term trajectory of indexes supported by Fed assistance has long been a concern. If we somehow would get a move down to that 3,600 area or even the lower part of the channel, some good increases occurred, and tightening, then I'd call that a win still for markets given where we have come from. For a real bear market reset we not only need price, we need time, a year or two where prices go lower, go sideways, and those used to seeing new highs start to doubt their strategies. Once we get the towel throw ins and sentiment change to worry, then it can bottom and start another multi year bull. 

That being said, shorter term, there are so many people out here now talking about how the market is going to crash with the Fed pulling away assistance, but once again when its this pronounced with so many expecting it, makes me wonder if it will actually happen. Even the inverted yield curve isn't a guarantee that markets head down immediately. I thought Steve made a great point as well that there are few alternatives to investment like the stock market right now. If I could put more than 20,000 a year into I Bonds at 7.12% guaranteed for my wife and I ($10,000 each per year is the maximum allowed), I'd certainly do it, though guarantees are very limited at attractive return rates. 

There are a lot of people, bulls and bears who aren't happy with this recent rally and waiting to position at lower and higher levels through buying and selling. Bears are super frustrated here and I saw a lot of giddiness on that one day where SPX was down 1.57% after a 13% rally off the 4,115 lows to the recent 4,637 area. After a 10-15% correction in indexes, the average return is 27% afterward. Again, all just history, and there has never been a time when the Fed has had to take this path. That being said, there could be a scenario where they make the cuts needed and do a little tightening, and have some room to play with after that. By then, prices have somewhat cooled in terms of inflation and people are happy with $3 gas or under instead of $4s.

As usual, one can go blue in the face with predictions, so its better that I just have a plan and allocations based on my risk tolerance, time frame, and levels at which there would be buying or selling occurring in my portfolio. I have a plan for my trading strategy and another plan for my long term investments. If we saw a move into that 4,662-4,718 area on SPX and were overbought, I'd have to strongly consider making some long term changes or at least start to. I most recently bought long term inventory when SPX was in the low 4,200s, so my first move would be to sell that. My top end of my SPX forecast is at 4,800 this year, a bit more conservative than my previous 5,000 I started the year with. Simply because I want to preserve the longer term gains I've made over the years, particularly on purchases I made from the corona crash. I would be waiting to buy new inventory after seeing where markets firmed up if we had a retest of the 4,115 lows or went lower. Otherwise it is a hold as I'm allocated across asset classes and already prepared. One day at a time.