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Happy Monday
I have no idea what happens next in the markets. But, I do have prices to check and I hate what I see.
The unintended consequences of COVID, supply chains, war, bad governance in the cities, states, federal government, and public boardrooms, money printing and on and on are such that I have little feel for how long this bear market will last.
Despite being in this uncharted territory, the strong opinions about inflation, rates, recession, debt cancellation, valuations and politics are at all-time highs. It is very noisy.
The data says everyone is ‘beared’ up.
But, Cathie Woods though is down 60 plus percent from her highs and not worried at all.
And, the people that are indexed to the S&P (most people) are just seeing a blip in their retirement accounts.
All I can point to right now for stocks (specifically the Nasdaq and The S&P) is that we are trading below the 200 day level (I went through this yesterday) and cash is not horrible.
For those of us that were raising and hoarding cash the last year, nice job, but your US dollars might be peaking out here so treat yourself to an around the world vacation with your strong US dollars until we get back firmly above the 200-day moving average.
Because I was so conservative last year, I will invest money back into wrecked technology stocks over the next 12 months (my 8-80 brands), but I am watching for signs that bases are getting built or panic dislocations.
As always, Ivanhoff and I tour the markets and our weekly Momentum Monday video is here. I have also embedded it below:
Ivanhoff’s comments are below:
April was four weeks of relentless selling for all major indexes. Small caps Russell 2k (IWM), large caps S&P 500 (SPY), the Nasdaq Composite which includes 3,000 stocks made new year-to-date closing lows. In fact, all of the above with the exception of SPY, have fully erased their entire 2021 gains. SPY has held better thanks to the Q1 strength in basic materials, energy, and consumer staples but even those sectors have been under some pressure lately. In a bear market, eventually, they get to every sector. There are no safe places to hide. The picture is not pretty but it is not surprising either. Last week, we talked about the recent tendency of stocks (especially tech) to sell off ahead of FOMC meetings. There’s a new one scheduled for the next week – May 3rd and 4th. The big question is do we get the usual post-FOMC bounce or will this time be different? The main indexes are on the brink of breaking down and having another leg lower. If the Fed doesn’t tone down its stance on future interest rate increases, look below.
The earnings season has just begun. The big theme so far is resetting expectations. Juggernauts like Google and Amazon, which everyone thought were invincible, missed estimates. Apple beat them but gave wide-range guidance citing supply chain challenges in China and the market sold it anyway. Tesla dropped 20% since its best earnings report ever as Elon Musk is raising money to fund his Twitter purchase and short-sellers have smelt blood in the water. If those major stocks can get hurt, no one is safe. This is why market sentiment has turned quite bearish. Many have already reached a point where they just want out of the market. Hitting everyone’s favorite stocks will do that.
Ok everyone…have a great week.
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