Beginning of a bear market 2022?

[nitrene]

If inflation doesn't come down soon, the high P/E stocks will continue to drop. The real problem is the Fed still doesn't take inflation serious -- if they were they would have stopped QE back in November when Powell claimed inflation wasn't transitory anymore. All they have done since early November is raise rates a mere 25 bps.

CSCO dropped 90% from 2000 to 2003. I doubt Amazon, Google or Apple will drop that much, but they could down 40-50% more.

 

[vincentnyc]

If inflation doesn't come down soon, the high P/E stocks will continue to drop. The real problem is the Fed still doesn't take inflation serious -- if they were they would have stopped QE back in November when Powell claimed inflation wasn't transitory anymore. All they have done since early November is raise rates a mere 25 bps.

CSCO dropped 90% from 2000 to 2003. I doubt Amazon, Google or Apple will drop that much, but they could down 40-50% more.

nflx already drops 70% from its high and fb drops 51% as of 4/23/22. like i said...fb and nflx are both the weakest fang stonks. i really wish fb would go away and disappear from this world like myspace.

 

[nooby_mcnoob]

0.50% of nothing is next to nothing. The Fed is way behind the curve, they must consider our economy the worst in human history to make cash=trash.

Historic interest rates

• Mesopotamia, c. 3000 BC: 20%
• Babylon, Code of Hammurabi, 1772 BC: codified earlier Sumerian custom of 20%.
• Persian conquest (King Cyrus takes Babylon), 539 BC: rates of 40+%.
• Greece, Temple at Delos, c. 500 BC: 10%
• Rome, Twelve Tables, 443 BC: 8.33%
• Athens/Rome: circa the first two Punic Wars, 300-200 BC: 8%
• Rome: 1 AD: 4%
• Rome, under Diocletian, 300 AD: 15% (estimated)
• Byzantine Empire, under Constantine, 325 AD: limit 12.5%
• Byzantine Empire, Code of Justinian, 528 AD: limit 8%
• Italian cities, c. 1150: 20%
• Venice, 1430s: 20%
• Venice, (Leonardo da Vinci paints "The Last Supper in Milan"), 1490s: 6.25%
• Holland, beginning of the Eighty Years' War, 1570s: 8.13%
• England, 1700s: 9.92%
• US, West Florida annexed by the US, 1810s: 7.64%
• US, Reagan administration, 1980s: 15.84%

Fed Funds
View attachment 282905

Interesting.

The whole Islamic banking system is based on not charging interest, so maybe the Fed is Islamic with zero interest rates?

 

[nooby_mcnoob]

If inflation doesn't come down soon, the high P/E stocks will continue to drop. The real problem is the Fed still doesn't take inflation serious -- if they were they would have stopped QE back in November when Powell claimed inflation wasn't transitory anymore. All they have done since early November is raise rates a mere 25 bps.

CSCO dropped 90% from 2000 to 2003. I doubt Amazon, Google or Apple will drop that much, but they could down 40-50% more.

Correct. Rate of change in balance sheet still above zero

 

[treeman]

Just as it was hard to predict the top, it is going to be hard to predict where and when the bottom will be.

.

This thread called the top pretty damn well. Nice job @vincentnyc. He called it in January, real time as the first post in this thread. 8% from the high. Is your expectation that someone top ticks it!?

 

[Millionaire]

This thread called the top pretty damn well. Nice job @vincentnyc. He called it in January, real time as the first post in this thread. 8% from the high. Is your expectation that someone top ticks it!?

No i mean before hand, or very soon after.

Like say in October 2021, it wasn't easy to say the final top will be in November 2021. Even in November it was hard to say that would be the top.

However after a few months, it is easier to say that was the top.

Same with the bottom. When the final bottom is in it will be easier to say that was it.

Although before hand there are obvious round numbers, like saying I expect a 50% correction from ATH.

 

[treeman]

No one is trying beforehand. Well, no one successful. I know a bunch people who were flat stocks in November. And more who were in low vol. The top was in Jan. Not November. We all know how to pull up a spy chart. As for the unwind, it's been going on since March 2021. As for calling the bottom, - again, no need to bottom tick it. A breadth thrust, with a follow through breadth thrust should do the trick. Bottoms are easier than tops.

 

[Millionaire]

No one is trying beforehand. Well, no one successful. I know a bunch people who were flat stocks in November. And more who were in low vol. The top was in Jan. Not November. We all know how to pull up a spy chart. As for the unwind, it's been going on since March 2021. As for calling the bottom, - again, no need to bottom tick it. A breadth thrust, with a follow through breadth thrust should do the trick. Bottoms are easier than tops.

If you read the second post on this thread, which was by me, the Russell 2000 was already down 20% from its ATH when this thread was started. So calling the top in the S&P and the start of a more general bear market was not hard.

 

[treeman]

I'm sure you shorted it then

 

[Millionaire]

I'm sure you shorted it then

I am a day trader, I never hold overnight. I may well have day traded on the short side that day, Jan 24th.

But even if i was a long term trader, then no, the risk reward of a new longer term short position opened on Jan 24th was not very good. The S&P 500 was already down over 10% at that point and very possibly near the bottom of a selloff (which it was)

I would have to use a very wide stop loss at that point, and that gives a poor risk to reward ratio even if you win on the trade.