Valens Market Phase Cycle Monitor & Corporate Credit Macro View for April 2021

April 22, 2021

  • Investors Would Be Wise to Sell In May and Go Away This Year. As highlighted last month, heading into Q1 earnings season, management are showing more reservation about their outlook, which may slow earnings growth the market is already pricing in. Corporate fundamentals signal a strong recovery in profitability, but the market is not pricing in a potential impending pause in growth

  • It is not just valuations and growth that are flashing warning signals. After a sharp rally through the first half of April, sentiment metrics are extended too. Exceptionally bullish sentiment indicators combined may position the market for a short-term pull-back, and point to reasons for a sideways market at best until growth re-engages

  • Any pullback or stagnation in the market is not cause for panic for long-term investors because credit signals remain incredibly healthy. There can be no bear market or return to recession even if growth slows, without credit overhangs. Favorable bank, corporate, and consumer credit fundamentals coming out of this disruption still point to optimism for an ongoing recovery

  • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 12 Month Dollar Cost Averaging

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