The third rally attempt in past months, signaled by the prior Friday buying frenzy, did not hold up, failing as prior rallies have. As a result, financial headlines are noting “the worst 6 month start for stocks since 1970.” 

Passive investors continue to get crushed, with the S&P500 Index down 20% and Nasdaq Composite Index down 28% on the year – and given we know these indexes are rigged to favor the better performers – the average stock is worse off. 

Things are also dire for investors holding cryptocurrencies – values have plummeted and some firms are now insolvent (we have 3 on our watchlist but only 1 assigned to any Level newsletter (an AVOID), thus we have regrettably missed some large short profits from them). 

Just like the prior week, however, Friday saw a late rally to end the week (wreaking more havoc on our analytics, see below) which is unusual given news remained mostly negative – corporations beginning to forecast earnings declines and layoffs, the government manufacturing survey reflecting a decline, and 2Q GDP estimates being revised to larger loss. 

Our shorts continue to provide the bulk of gains, along with a few long positions that continue rising. Level 1 continues to under-perform owing to most positions being unproductive longs. 

Not sure who the investors are that were buyers on Friday, remains to be seen if “the fourth time is the charm” for a broad-based sustained rise in stock prices. 

Analytics: Persistently, highly erratic intra-week trading activity continues at a level not seen in the past 8 years, leading to more revisions to the 900+ trade/no trade mathematical outcomes than normal. This week alone, adjustments suggest 3 positions be exited now, and though frustrating, it remains the correct and disciplined response: DDD, to correct an earlier false positive buy signal; QUOT, having missed an earlier short signal; and REKR, to correct an earlier false positive buy signal. 

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