Confirmation is Obvious
Market response today confirms a breakout is in play. How low could things go, I have no idea, The 200 day average of our Macro Algo is 43 % down from todays lows at 11:00 CDT. That would be kind of unbelievable, but how does one handle this? I don’t know, the market is trained to rally strongly on every sell off, but the trainers are kind of beaten up at this point.
We are all kind of on our own..
So we are all kind of on our own. As we have mentioned P/E multiples are not sustainable, especially on the FANG stocks. Long term the economy’s expected move out of speculation to buildable growth will have some hiccups. I would think we will see an initial Biden bounce but it will not hold. Remember it took Obama a couple of months to cleanup the Bush mess in 2009 and build a bottom in the economy. This situation in 2021 will be more difficult, mainly because the Trump crowd is loaded up on bad investments, and the zombie companies will be a major headwind.