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Chartists make a lot over certain patterns. I pay attention to them, but I don’t live and die with them. There are plenty of ways to look at a market and charts are but one of them. Today, we had what’s called a “death cross” in the S+P.
The chart patterns here do not inspire confidence.
The mainstream media will try to spin the death cross as positive. Yes, over time the S+P goes up 6.3% after a death cross. Those of us that paid attention in investments class during business school will recall the long term rate of return for the S+P 500 including dividends is closer to 8%, and depending on how you calculate it could be as high as 12%.
Nothing here makes me want to jump out of my seat and buy. I have been saying on Stocktwits and Twitter to “STFR”. Nicely put, it is to sell into any rally. If the stock market gets a bid, so be it. Sell.
Emerging markets are not looking appetizing either. Like a Chinese meal, after buying you will still feel empty a few hours later.
I saw where venture capitalist Garry Tan posted a chart showing how oversold the tech sector is.
Garry is a supersharp early-stage investor. One of the best. But, I remember 2001. Stuff was oversold on its way to 0 then. There are going to be some great bargains and long-term holds to purchase in tech just like there were in 2001. But, momentum and sentiment are going to make them cheaper than they are today. Facebook has lost 50% of its value. Despite how despicable Mark Zuckerberg is, and he is a despicable human, Facebook has a solid business if they choose to pursue it. But, you will get a chance to buy $FB cheaper unless Zuckerberg chooses to buy his own stock with his own money.
Except, people like Zuckerberg aren’t like that. Facebook might buy back its own stock but I suspect he will continue to be a seller using the excuse that he wants to diversify. 'Elon isn’t selling his stock unless he posts it on Twitter. There is a major difference between the two.
We haven’t seen the whites of the sellers eyes yet. This is a death by a thousand cuts break, not a crash. The market is down 11% this year so far. In my opinion, it is not near over.
Separate yourself from both media camps. Is there any single thing happening right now in the economy that you can hang your hat on in order to have not only the confidence to buy, but the conviction to buy?
After all, we don’t invest capital in order to feel good about ourselves. We invest to get a return.
Every day right now when I wake up, I lose .5% to 2.5% of my net worth every single day. In addition, inflation is eating up my savings at the highest rate I have ever seen in my life since the 1970s. Even if the Fed raises rates a half a point, the underlying conditions aren’t going to change.
Remember, markets price in all information and future expectations that they know about and discount it all into the price you see today. Are Fortune 500 earnings going to be higher 12 months from now, or lower, or steady? Mr. Market is telling you there will be no growth, and maybe negative growth.
Stocks continue to go lower. The sentiment is that you can sit on your hands and buy them cheaper tomorrow. It’s the exact opposite of deciding whether to put gas in your tank today or tomorrow. You know that the price of gas will be higher tomorrow, so it’s best to buy it today.
Stocks aren’t cheap yet. Yet.
Daily ES at go, no go zone. It looks ominous, but... ES monthly, at the 20 period moving average, just a bull flag at this point. If buyers puke it up from this zone, I'll become decidedly more bearish. The monthly 50ma a support zone that's a long way down. Covid crash rinsed the 50 and reversed.
Daily charts may make good news but a death cross means little if you ask me. I love seeing FB get squashed! 150 might be a decent trade idea.