The Monday Morning Playbook: Week of September 30, 2024

Good morning,

“There are no called strikes on Wall Street”
- Warren Buffett

First of all, all credit for this intro goes to J.C. Parets of All-Star Charts. J.C.’s Twitter and blog posts were hugely influential to me as I was starting out in this business and I’ve been lucky enough to meet and do some interviews with him over the years.

But that quote, first attributed to Warren Buffett, is top of mind for me this week for two reasons.

One, today’s the last day of the MLB regular season and my Braves are fighting for a playoff spot.

And two, amid China’s parabolic move higher last week, I couldn’t help but think, “Who cares?”.

Now, that sort of apathy and skepticism is absolutely the attitude on which bull markets are born, and I won’t be offended if you take it as a contrarian indicator. To be clear, I’m not bearish on China.

There were legitimate signs of trend changes before last Tuesday’s stimulus announcement and with the rest of the world in a bull market, it makes far more sense that China would play catch-up than continue to sit on the sidelines. Gun to my head, I think it is higher 12 months from now.

But we won’t be adding any related positions in our ETF portfolios tomorrow when they trade.

The most important reason is because China isn’t part of our benchmark. The benchmark is how we determine what neutral is, and with the S&P 500 as our bench, neutral is 0% China exposure.

If we’re going to overweight something, we want a bullish relative trend (we certainly don’t have that) and an attractive entry point (the 4 main China ETFs I track all have RSI-14s over 80, above 70 is considered overbought).

So this isn’t our pitch.

If we don’t get one, oh well. There’s no called strikes on Wall Street.

I don’t know you or your clients, but in all my years as a financial advisor and working for financial advisors, I never heard of someone losing a client’s business because something called Pinduoduo was up 50% in the past month and they didn’t own it…

This week’s report will review:

• US equity markets

• Bullish action from our risk ratios

• China

• October seasonality

• and more!