Proflex Market Update - Wk 26

As I travel through the heart of Europe this summer, I find myself reflecting on the impact of religion on human development, science, art, and society. Although I am not a religious person, witnessing the historical significance of the Church in shaping political and societal landscapes is a conflicting yet enlightening experience. As you grow older, visiting different part of countries impact you differently and I am revisiting Europe with fresh views. It is interesting how same places give me such different perspectives as I am back here after more than 15 years.

Market conditions

In conversations with people across Europe, I’ve observed that economic conditions here feel very similar to those in the US. Last week, we discussed how the macroeconomic environment has created a disparity, with the top tier of the population driving inflation and growth, while the masses bear the brunt of these conditions.

US Tech stocks were due for correction:

The US markets saw a significant correction in tech stocks, with NVDA falling more than 15% after reaching new highs post-split above $140 which reflects a YTD gain of 190% at its top. AI led euphoria has got us to an extreme condition and we have been anticipating the correction for some time. This aligns with our action plan and the caution we’ve advised. Our All-Access members have already hedged positions in portfolio positions most at risk.

We’re currently at a crossroads between optimistic “buying on dip” opportunities and concerns about “runaway valuations and bubble” scenarios. Despite the macro push driving markets higher, there is significant deleveraging happening concurrently. Summer often brings larger moves with thinner volumes, and we believe this churn is beneficial, strengthening the market in the long run.

While we are not overly concerned, we advise caution before jumping in with cash in the current market conditions. It is still a good market to stay invested and this correction is just a blip in long run.

Cryptocurrency Market:

Bitcoin experienced a deeper correction, falling below $60k again in market action today, with altcoins also seeing major corrections. We view this as a necessary churn and remain unworried. The macro conditions still suggest a correction phase, followed by an asset bubble driven by policy actions, as discussed last week.

We have been optimistic about money allocation and the flow will be back after summer. We are watching carefully if this storm takes us to deeper levels below what we saw in this cycle and if we will test $50k. For now, it is a range-bound action again in a $60k to $70k range and we do not see a major shift in market. We would be concerned if buyers do not come back in below $60k.

Other actionable insights:

• Tech stocks: As we are heading towards end of Q2, soon the focus will shift to earnings. This recent correction is healthy for markets as euphoria driven rally never lasts long. As we saw with Q1 earnings, we might see further separation between companies at micro level while macro money allocation remains positive for asset class.
• Precious metals: Gold/silver are also seeing consolidation in current market conditions. But as average price of precious metals in Q2 is significantly higher than last quarter, we will see positive impact to miners as we head into earnings season soon.

Strategic Positioning:

For our newsletter subscribers, we’ve been managing the portfolio with a cautious, hedged approach, locking in profits using our favorite options-based hedging tools. Our strategies continue to outperform the market across all three newsletters.

We plan to maintain our current strategies until we see clear post-summer market direction for late 2024. In short, it is a time to stay hedged and hold our positions, as the market will reward strong companies in the long run.

Proflex All-Access: Your Market Compass

Explore the financial markets with Proflex All-Access, your comprehensive resource for deeper market understanding and active participation. This premium service offers subscribers exclusive insights and actionable investment advice, giving you a significant edge in various market conditions.

Proflex All-Access provides detailed analyses and recommendations to optimize your investment strategy. Our specialized newsletters include:

• Growth Gazette: Aimed at achieving above-market returns for aggressive portfolio growth.

• Income Insider: Focused on conservative strategies and income generation for yield-seeking investors.

• Crypto Pulse: Offers advanced strategies for investing in the rapidly expanding cryptocurrency market.

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Thank you for your continued trust and engagement. We will keep you updated on further developments and our strategic adjustments.

Feel free to send us your queries at proflex@proflexfinance.com

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Best regards,

Raman Bindlish

Editor-in-Chief,

Proflex Finance

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