Stocks are going up because more money is coming into the market than going out. There’s simply nowhere else to put it. You’re seeing the same kind of wild inflation in every single type of mattress that rich people stash money under. Just look at the market for art, the market for wine, and the price of precious metals.
There’s no relationship left between stocks and fundamentals that I can see. I’m not and never was one of those people who thought that stocks= the economy, but at this point it’s not just that stock prices have significantly separated from the reality of the general economy… they’ve also separated from the reality of the companies underlying the instruments.
This is a speculative bubble fueled by vast quantities of printed money full stop. Something weird is happening where the inflation that economics tells us should follow massive money printing is taking place almost entirely in rich people shit. I wonder why that would be? (speaking as a member of the minor American nobility I can tell you I got five figures from the government, my wife, a nurse, got a 1200 dollar stimulus check)
This tidal wave of cash without anywhere to go is also propping up the market for single family homes through REIT’s and private equity plays in the rental market. That’s one of the only places where the median family ever comes into contact with the excess return on invested capital that is making it so that people in the top 5-10% are doing so well.
Meanwhile the publicly traded companies with bonkers valuations are scrambling to make the numbers on the spreadsheet that represent their fundamentals look as much like ‘expectations’ as humanly possible. If that means laying a bunch of people off in the middle of a pandemic to hit their EPS, so be it. Even if in the long run the companies EPS will suffer because of that decision, the executives are trading on their own exit date and their next bonus. As a result of these incentives companies, their vendors, and their employees are being hollowed out so that corporations can show ‘growth’ despite having in most cases fully mature businesses.
I don’t know how this bubble will pop, but they always do. It’s a question of when and why not if it’ll happen. But hey, maybe this time it’s different. Maybe we really have discovered the investing perpetual motion machine. Turns out all you have to do is print vast amounts of money and buy bonds with it.
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Have spxs calls. So basically yes.
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Just my opinion, but I don’t think it’s that cut and dry in regards to stimulus chances.
Republicans obviously aren’t interested in additional unemployment stimulus but if businesses close up or take a hit as a result of covid than those businesses will once again be in need of additional grants - which could incentivize reps to support a package as they would want to assist their fellow businessmen which could include unemployment aid. Metals didn’t take too bad of a hit today.
If there is no stimulus until after that election Mitch will not put anything on the floor.
They will wait for a dem senate to spend trillions so all remaining Republicans can vote no and point the finger at reckless democrats spending their great great grand childrens money. At least that is my take. They never wanted to do any more bills they just no better then to say the quite part out loud.
The house passed a 3 trillion dollar bill and Mitch tried to put a bill on the floor one sixth the size loaded with poison pill non starters. That’s not negotiating its saying no.
My political theory is that this entire stimulus discussion was all about placating voters and was never going to happen. Nobody and I mean nobody inside the beltway wants a second term for Trump. After getting murdered in 2018 and likely the same treatment in 2020 why would any Republican want Trump to stay in power. They already have the court, Trump is useless to them at this point. And I am not even sure Trump gets it.
Biden is going to roll Trump, nothing is going to stop that. The Supreme court might step in to save a Senate seat or two and let Mitch hold on to power.
Just to give an example here. If you are Ted Cruz do you want to run in TX in 2024 after 4 more years of Trump. Or would you rather run against Biden, budget deficits, economic anxiety, and immigration? Which one of those scenarios is in Ted Cruz’s political interest. I would bet a nice sum of money Cruz did not vote for Trump. Probably even a majority of R senators are not voting for Trump!
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I think they take another leg down this week. My target are:
(SPY) 331
(QQQ) 271 ish
That about another 3% from current levels.
Strong support at those levels. If stonks break through those levels without a big bounce then we could go much much lower.
Short to those levels then close out. If you are super active Maybe reverse and go long.
IWM offers the most downside if the pandemic really heats up. Small caps be getting crushed hard because you cant hide money in those like you can QQQ growth stocks, If you don’t believe earnings matter jus look at IWM. It peaked back in 2018 and never fully recovered.
I think the decoupling of stocks from the economy is the amount of overall market cap that is fed into high tech growth stocks, Zoom, Tesla, and all the softeware plays. And to a lesser extent Apple, and Microsoft. Its easy for the investors to stick there money in these guys and pretend that they will grow into their valuations.
Apple is a 2 trillion dollar market cap stock trading a +30 PE. 5 years ago Apple was trading at like a 12 PE. How long will it take Apple to double to 4 Trillion? If you own Apple then sell it. This is a good as it gets for the next decade.
Fun Fact. The market cap of Apple, Microsoft, and Google are about equal to the entire 2019 federal budget.!!!
(SPY) the ETF that tracks the S&P 500. If you do take a position dont be greedy.
HIT TARGET CLOSE TRADE
HIT TARGET CLOSE TRADE.
Greed will fuck you every time.
Yes 331 I see what I did.
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https://www.tradingview.com/chart/skujnPoO/
https://www.tradingview.com/chart/skujnPoO/
Some one let me know if those links work. These are the charts I am using. I went short spy today at 342 closed at 338. Was thinking it would go lower but greed is bad and i was not able to monitor the position all day
Not bad though, bought spy putts at 1.18 and sold at 3.60.
Good posts, Theo.
I’d suggest going a bit easy on the support and resistance montage as an idea of what may come next.
The market is quite talented, for financial incentives - at going against the rush-to-judgement folks who may be pinning an idea that has been solved for maximum profit for the rich.
Doing the opposite of what ever the emo feels in this game will always come out ahead. That is both a fact and damn hard to do.
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Its a tough game but very beatable. Volatility can be very profitable as long as use discipline and stick to the plan. Mistakes can be expensive but there is a lot of value if we learn from them.
Another way to think about support and resistance is supply and demand. And I am amazed out well indexes react to them time and time again.
Trading markets and poker have a lot in common. It all comes down to risk management and strategy. And yes contraian plays can be the most profitable but need to be thoughtful and well timed.
Markets usually signal big moves in either direction. Part of my strategy is trying to find those signals. It doesn’t always work so when wrong the key is to minimize the loss. We don’t run three street bluffs on calling stations!.
My read over the short term is that rapidly rising coron virus cases is going to spoke markets. Thats the dominate theme for now. But there will be a lot of cross currents; the election, stimulus hopes, vaccine news. So I dont plan on staying in any trades for more then a few days.
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Futures down 300 already after a steep drop at eod.
DRILL TEAM SIX IS BACK!!!
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Did stonks finally catch up to the fact that covid is out of control and no matter what we have a paranoid narcissistic asshole in charge of the country for at least 12 more weeks?
Or, as NBC puts it “Stocks tumble again, with the dow falling due to lockdown concerns.”
Let us not forget that NBC is a HUGE conglomerate that 100% wants OFB
Wat? If Trump loses, there is no way he approves stimulus…
If Trump wins, he no longer needs anything from his base, and there is no way he approves a stimulus.
The best chance we have at a stimulus is 3.5 months away
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