Elvis Has Not Left the Building… Yet
After the brutal trading sessions in March 2020, which saw circuit breakers and trading halts, the S&P 500 fell some 35% in 20 days.
The moment the rebound began, I started hearing voices saying that it was a dead cat bounce and that we would see a “retest of the lows.”
Some of Wall Street’s most notable and successful investors called for a retest of the lows or worse.
When the Dow Jones fell from 30,000 points to 18,000 points, I heard some of my best investor friends call out Dow going to 10,000.
The bears took over, but then the FED said that they’d start to buy junk bonds…
It was game over!
It was revealed months later that the FED did not buy a single junk bond, so just the promise of doing so sent markets to all-time highs by August!
Powell’s words, both dovish and hawkish, carry with them a lot of weight.
CNN’s reliable Feat and Greed Index is pointing to extreme fear, along with many of their other components. Check them out HERE!
Courtesy: Zerohedge.com, CNN
Yet, even with everything we’ve undergone this year, the vibe is still that capitulation has not occurred.
For the first time since March 2020, retail investors have been net sellers, and their sentiment is that the bubble is completely over.
Because cryptocurrencies are also bleeding, they are in a truly horrible double-whammy.
The bears say this is not enough and that more selling is needed to declare a washout – the utter incineration of retail investors.
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While not buying could just mean they’re out of dry powder or have become indifferent about the whole situation, understanding that Wall Street is in command, their bearishness doesn’t leave any room for doubt… they’re IN PAIN!
Another reason you’re seeing such wild swings is that cash levels are really high… the sellers have mostly exited and the buyers have mostly bought the dip… there are few buyers and few sellers, so liquidity is DRY.
Liquidity levels are as low as they were in March 2020 and January 2019 when the FED did its monetary U-turn.
In all regards, Apple Inc.’s poor performance last week felt like the final nail in the coffin, which is why we saw a huge Friday rally, but the bears say not to hold your breath.
This is why billionaires Paul Tudor Jones, Ray Dalio, Jeff Gundlach, and others are calling the market “un-investable.”
What should one do when some of the savviest investors in the world are extremely bearish and claim that retail really needs to sell out?
- Millennials are not like baby boomers; they’re not really panic-sellers, but much more “buy the dip” types, so capitulation may never occur in stocks since most of them are selling cryptocurrencies instead.
- What’s stopping you from slowly accumulating shares of your favorites?
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