Everything Bubble
Believe everyone at this point can see that we are in one of the largest Bubbles we have ever seen. Homes in the Austin Area built in 2017 for $360k were selling for $650-700k in 2022. 5 years for almost a 100% investment. We had for the first time in our history stocks hitting $1 trillion Market Caps, we had stocks like ROKU hitting PE ratios of 124, AAPL historically traded between 12-16 PE trading at 38 etc.
This led to Hedge Funds, “smart money”, actually acting like dumb money. Cathie Woods type Funds buying stocks at ridiculous valuations, and all of it fueled by years of QE and low rates.
Generally Bull Markets last about 10 years, which would have put the current Bull Market slow down coming in around when Covid came about. Instead of naturally letting the market slow down, the Fed and our Goverment heightened the Easy Money issues, even to a point of issuing Checks to every American. Our Stock Market surged from SPX 3393 to a high of 4818 in 2 years about a 40% move.
When we started to initially pullback “Smart Money”, who had been buying the ROKUs on the move up got caught. Inflation hit hard and quick, and by the time they had time to react, they were caught with some sharper selloffs. So they spun the “transitory” narrative, introduced ODTE, and essentially tried to unload their Bags into retail as much as possible, while switching into Energy etc markets.
This is one of the biggest reasons we see Bear Market rallies and no full capitulation like we saw during Covid, so they can shift money onto retail, and move money into different sectors. But 2 weeks ago we saw Price Action change completely from 2022. We are now seeing hard selling pressure, and as soon as it stops the Buy Algo pops it back up quickly. This is allowing “Smart Money”, so shift more aggressively out of their positions.
I hold no Bias, as most can see I was bullish since the 3817 levels on the market, and after the rejections at 4178 have shifted. I strictly trade Momentum, whichever direction market is moving. But we are seeing Price Action change completely, and more aggressive selling. Market looks to be on the verge of our Capitulation moments, maybe not this Week, but do see it happening March/April timeframe.
