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

August 19, 2021

  • The Most Important Rule Of A Bull Market Is…Buy The Dips. After a healthy market rally the past two months, investor sentiment that had moderated is now starting to flash warning signs of a “hot” market. Combined with high inflation and continued lingering inflation concerns (and Delta risks), this points to one key risk to the market. There may be more volatility in the near-term. However, the fundamental backdrop means investors should buy any dip.
  • The biggest reason that investors should buy the dip is the bedrock of any bull market, healthy credit. Credit metrics show healthy availability of credit from both credit markets and banks, and no risk of defaults. That means the risk of a pullback turning into a bear market is exceptionally low.
  • Not only is credit a positive, corporate health points to reason for optimism too. As we have been highlighting, profitability has already recovered impressively from the pandemic, and there are now signs of management being open to investing again. Healthy corporate profitability and the potential acceleration of investment fuels the lifeblood of the market going higher…earnings growth
  • Timetable Recommendation: 50/50 Split for 5-10 Year Money and upgrade to 9 Month Dollar Cost Averaging.