End of April: Exquisite Timing

Talk about exquisite timing. Earnings season is winding to a close, and while the figures haven't been great, they haven't been uniformly awful, either. As a result, US (and, by extension, global) equities have enjoyed quite a tasty respite from the early-year bear market.

However, as Macro Man looks at his calendar, he sees that tomorrow is the end of April (and what an eventful one it should prove to be, with the US GDP release and Fed announcement!); and he cannot help but recall the old equity trading saw that one should "sell in May and go away." Yet lo and behold, what should appear on the cover of Barron's this week but a tan, rested, and ready bull, looking relaxed and ready for some action.

Colour Macro Man skeptical. The S&P 500 has wended its way towards its 1400-1405 resistance zone, but the price action and volume has been less than convincing. The Barron's cover article was revealing; its survey of "big money" managers showed a marked skew towards bullishness, with many appearing to believe that this was a contrarian view. Yoinks!

It appears that these chaps are prepared to trade the recovery before we've actually experienced the recession; Macro Man remains highly wary of this view and outcome. Worryingly, resilience elsewhere in the world is starting to crumble. Dataflow in Europe over the last week has been pretty uniformly awful; it is starting to look like Macro Man himself was guilty of some exquisite timing last week.

Similarly to the SPX, the Eurostoxx is running right into resistance, though chartists might note that a break above would appear to confirm an inverted head and shoulders pattern, thereby heralding further gains. But with the European dataflow turning down so hard and equities nearing resistance, Macro Man finds himself growing more and more bullish fixed income, particularly euro fixed income, every day. He has some positioning there, and has now resorted to sitting on his hands so that he doesn't add too much, too soon.

He can only hope that his timing is as exquisite as he reckons Barrons' cover to be.