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The Hard Part
It’s hard to think, so most people avoid it.
It’s much easier to grab a stat that confirms your bias, reinforce your confidence, and move on.
Over time, that builds a thick callous toward opposing views, creating a tribal stance on issues and ideas.
This is Politics 101.
It’s why we mostly have only two parties.
Right vs. Left.
Middle ground? That’s for losers.
Extremism sells. Nuance requires thinking.
Unfortunately, markets are no different.
You’re either bullish or bearish. Black or white.
And the "market personalities" know it.
They prey on the casual observer.
They solidify a view, build a brand around it, and tribalize their audience.
The Heel and The Babyface
It’s the same multibillion-dollar WWE business model.
Villains created out of thin air just to give their audience someone to hate.
But reality?
You can be a combination of all these things at the same time.
There are many data points that lead to different insights.
If your goal is to make money from the market you embrace nuance.
If your goal is to make money selling things about the market you run from it.
Nuance assigns weight to opposing data factors.
The overall weight then dictates the view and adjust exposure accordingly.
Maybe you have 80% bullish data and 20% bearish. You stay bullish.
If the mix shifts closer to 60/40?
You trim exposure.
You adjust. You adapt. You change.
The problem?
Changing your mind has a negative connotation.
To the casual observer, nuance looks like hypocrisy.
And it’s way easier to sell a story:
"I’ve been bullish since XYZ! Screw the bears!"
My goal is simple:
Make money FROM the market and show you how I think through it.
And truthfully, the process is nuanced. It’s about:
Being "hypocritical."
Changing my mind.
Weighing both bullish and bearish data points.
Focusing on the weight of the evidence, not ego.
Over time, that builds something hype never can...Trust.
I don’t want you to just catch my hot takes.
I want you to understand the thought process behind the moves.
Stephen A. Smith makes millions talking about sports and zero dollars playing them.
The market world is full of Stephen A. Smith’s selling the illusion they’re LeBron.
I'm not here to pretend.
I'm here to play the game right in front of you.
The Breadth Nuance
As I’ve written extensively over the past two months:
Market bottoms require two things. Capitulation and Follow-through.
We’ve seen plenty of capitulation.
Follow-through? Until recently, it’s been weak.
This week, though, we got several breadth thrusts.
It’s obviously not bearish to see an acceleration in stocks going up.
BUT — here’s the nuance:
We had breadth thrusts this week that typically show up near or at market bottoms. True.
Breadth is still bad overall, with the majority of stocks below their 50-day and 200-day moving averages. Also true.
This rally has been strong as we’re up over 10% in two weeks since the early April low. True.
The rally simply got it back to where where it was two weeks ago. Also true.
The nuance right now is still mixed.
It’s not 80% bullish and 20% bearish, it’s still closer to 50/50.
But if this really is THE bottom?
The mixed signals will become less mixed.
We’ll continue to see clean follow-through.
We’ll hold and build above key levels.
No need to rush.
Let price and evidence do the talking.
Thompsons Two Cents
Can I be sappy for a second?
I genuinely appreciate all the love and support I get here.
People subscribing and sharing my work keeps opening doors and helping me improve what I do and bring even more value to those who support me.
I now have two additional blogs coming out a week under “Thompson’s Two Cents.”
I’ll be dropping my two cents every Tuesday and Thursday.
This past week I was at the beach so no new ideas but be on the lookout this week.
The Best is yet to come!
Cheers,
Larry Thompson, CMT CPA