The Last Opportunity to GET OUT!

[status1]

The SWP/AWAKE models are projecting a horrific next few quarters

Doesn't seem like anyone want's to short the market so I guess we keep going up as usual and wait until everyone is long and only then we will go off the cliff
AAPL is almost completely recovered from the breakdown in Jan It's only about 10 points away which can easily reach in a couple of weeks and of course SPX will follow in the same direction so I think there is plenty of time to get out at higher levels

Of course as soon as I go long the market will immediately go down

 

[srk]

I have been trading for 35 years now, and have learnt my lessons. Hold and buy has been the best strategy for me for the long term. Minimizes my capital gains.

Most of the models dont hold up a whole lot better, and then paying capital gains evens it out. I have held all my investments without selling through the dotcom crash of 2000-2002, financial banks/ recession 2007-2009, Covid in 2020 and then now this last year, without any regrets.

If you can find a predictive financial model out there which is 60% accurate , one can make tons of money.

 

[Wayne]

I have been trading for 35 years now, and have learnt my lessons. Hold and buy has been the best strategy for me for the long term. Minimizes my capital gains.

Most of the models dont hold up a whole lot better, and then paying capital gains evens it out. I have held all my investments without selling through the dotcom crash of 2000-2002, financial banks/ recession 2007-2009, Covid in 2020 and then now this last year, without any regrets.

If you can find a predictive financial model out there which is 60% accurate , one can make tons of money.

I love it! Everyone needs a system that works for them. I personally use my adaptive macro portfolios. I don't like the large/long drawdowns of recessions. I let the quantitative data run the show and manage the system from a higher level. As for the capital gains... One method is to leverage up with margin to purchase other assets or more of the same. This small cost is far less than the taxes on selling the security. Also buying/selling options to hedge an asset to reduce delta exposure is another way to reduce exposure while never selling the underlying asset. Selling costs too much if we are in a taxable account.

It takes some serious kahunas to hold long on during dot com and 08. Props to you!

 

[NoMoWork]

Wayne, In another post you said you were selling all equities in your wife's IRA. Is that still your plan?

 

[Wayne]

Yup, already did, now I'm shifting back to equities today. We have some positive headwinds that are now coming in for the next 2 quarters. Looks like the crash is going to be after q4. I will find another time of over excitement on the bull side to slide out of equities again. There is only so much we can do with a 401 k and during bull markets it's normally not advantageous to time, But near markets can be really fun!

 

[Jasper]

Fed GDP QoQ Q3 estimate just shot up from +0.3% to +2.4%. Looks like much of it is driven by net exports. Are such swings in Fed estimates at end of quarter typical?

 

[Wayne]

In tightening credit markets each parameter that makes up the weighted forecast model will have larger fluctuations. This is when forecasting can get hairy. Stocks are primarily driven by GDP but the higher the leverage in the system the more susceptible they are to tightening monetary policy. We have a lot of leverage in the system that is unwinding so GDP might not matter if the Fed continues its warpath.

The tiny amount of buying I was doing I sold 3 days ago on the big rally. To much Crash potential still.

 

[BT1]

What you are asking is very DEEP. I'll write about it in the weekly article and talk about it in the next SWP QA. In short, though, the initial stimulus wasn't enough in 2008 and the economic behavior of risk-off was more entrenched. At the same time business accounting switch to mark to mark. By doing this, as more assets fell businesses and banks had to report their value and adjust risks and loss of equity on the spot. It is like if someone were to ask you to lift your max lift in bench press when you are currently sick with the flu. It isn't representative of your max but that is how they are going to grade you. And based on that lift you are in the lowest class of competition. When this happened it sent a spiral of assets deflating.

As I have been stating though we do look to improve over the Q3 and Some of Q4. My models are changing as we speak. CPI will likely come in lower, possibly adding fuel to this rally in the possibility of the Fed slowing down their rate hikes. Models are based on the current projection of the rate of change. If the fed can slow down or even halt it means the current speed of the market's selling is overdone. Hence we have a rally. It's entirely possible for us to rally/stall for a few months right now as the data comes in and economics improve QOQ. Still, we are going to see YOY results significantly shrink on a GDP basis. It's a counter-trend move that will end with the collapse stage of recession in Q1-Q2 of 2023. #double dip

Is todays WSJ article the start of FED hike slow down rally mentioned previously, before Q1 collapse stage?

 

[Wayne]

Is todays WSJ article the start of FED hike slow down rally mentioned previously, before Q1 collapse stage?

Yes, when it does happen, we will enter the depths of the collapse stage. That is typically when the selling accelerates for equities after a brief pause. That is about 2/3 of the way to the bottom on average. Right now we are about 1/2 way through the cycle. This was the easier half. As for this rally, it's just garbage speak. This is a bear market rally from oversold levels and we have yet to see the actual selling when more companies report negative growth projections for revenues and earnings like Google did. This is not what the beginning of a new bull market looks like. This is pure hopium, a very dangerous drug that is given to hopefully new investors and fear-frozen traders in bear markets. I hit the SELL button harder today. Let me know what you are doing. I am interested to hear other viewpoints or even similar views.

 

[BT1]

I have been watching for similar action, rally from oversold levels on false hope and then eventually drop again. Just not sure on timing

 

[Marcas]

I also hit sell button today. I did it few points to early and watched spread go from .90 to 2.00 (I was short put spread). Oh well, nobody said trading is easy.

I was very reluctant to close or spread the risk because of 'silliness' of this rally. All ended up well with a nice profit - be more careful next time. I'll try....
It was 0dte management of previously open position.

Timing is everything. It is not enough to say we are going up or down. For this info to have value timeframe must be attached.
I expect some pause here and attempt to rally again (unless something happens). Then I plan to short mid term.

I agree with your predictions in general. I'm already short mid terms but am also long Leaps. Shorter terms (2weeks) I play by ear.

As I mentioned - my thinking is that elections play very important role here. Politicians realize that if people's pension funds suffer their chances to stay in power can be impacted. This may be a good reason alone for a nice rally or, at least, a force preventing market collapse. Economic costs do not matter (for them).

I read your analysis about Fed tightening efforts etc. and, as said, I agree. Crash is quite probable scenario. (Timing!)
Eventually they need to inflate, and inflate a lot. They simply, in my thinking, have no choice. As you noticed we are at the ends of the game.
(Look at Japan).

For me the overflowing drop was when they started promoting MMT. Pure idiocy, unless you are paid to move that idea forward. This was the "backing" of "reasonable money printing". Of course problems did not start with MMT but many decades earlier. We are witnessing all those policies fruiting (is this a word?). Unfortunately.

As always, I can have it all wrong - and I trade with this in mind

 

[Marcas]

From today's show:


I'm only guessing that many people, when constantly bombarded with logic like this, do give up on thinking.
The reasoning behind this Jap manouver can be presented but only highly educated people can believe it.
( I hope you are familiar with that quote that you have to reach certain level of education to be able to believe shit like this - it way Keyens, if I'm not mistaken.)
A lot of effort was put to distort thinking.

Will not post domestic examples except personal one:
I put some shorts today. Too early. Again...
I guess some people will never learn...

 

[Wayne]

From today's show:
View attachment 4331

I'm only guessing that many people, when constantly bombarded with logic like this, do give up on thinking.
The reasoning behind this Jap manouver can be presented but only highly educated people can believe it.
( I hope you are familiar with that quote that you have to reach certain level of education to be able to believe shit like this - it way Keyens, if I'm not mistaken.)
A lot of effort was put to distort thinking.

Will not post domestic examples except personal one:
I put some shorts today. Too early. Again...
I guess some people will never learn...

In general spending from governments increases inflation. It is what it is. by by Yen.

 

[Robert B]

Shorter-term (2-4 weeks) models are pushing more bullish as of this writing. Medium-term (3-6 months) got pushed very bearish now. Strong jobs pushes the Fed even further into a corner. Their mandate is for 2% inflation and full employment. Right now we have 9% inflation and the lowest unemployment in history. Stocks and bonds hit ~20% down and now commodities joined them. This was with the Fed not even making a dent in their targets. What will the rest of the move in interest rates and monetary tightening do? 95 Billion of selling pressure in SEP https://eldfall-chronicles.com/product/slayer-dragoon/

Every bear market enjoys a hope bounce. This is the fastest monetary tightening in history, and the worst start of the year for the s&p in history as well, a big bounce is just what it needs to push down again. it wouldn't even surprise me to rally further. I hope we do! 9% inflation with a 20% dive in stocks is a 30% loss in purchasing power, which is a heavy correction so far. I have never seen this many red numbers on future projections though. True this quarter is a reprieve but wait until Q4 2022, Q1-Q2 2023. #Stage 3 "The Collapse" face expression changer

It sounds like you're closely following the market trends and considering various factors that influence them.

 

[Wayne]

It sounds like you're closely following the market trends and considering various factors that influence them.

That is exactly what I do. Measure, Map, ACT, Repeat! New Highs for SWP just recently!

The shadow QE has been the only thing pushing markets higher. Fed will want to keep the party going as long as it is only asset inflationary. So far they have not needed to kill the markets to curb inflation. 400 billion left in the R repo market. Will they turn back on the faucet? Things are in a very neutral spot right now and when risk does increase it tends to happen fast in these environments. There is a FED put in place though so the downside is very limited. Crashes might be good buying spots due to the printing press still having some juice in it. 400B still remaining. Then run for the hills. lol!