We could be due for another bear market rally soon. What comes after may not be so pleasant.
Hit the like button if you plan to take advantage of the next bear market rally. I'll be on top of it with our Patreon community.
Note: If you are a new email reader in my community, please read my previous email first so that you understand the context in which I’ve been sharing my opinions. In addition, starting this week, you will receive a separate email newsletter from my Staff Investment Analyst Team that covers helpful market data points in a very concise fashion.
Dear YT Friends & Public Investment Community,
First of all, I want to wish you and your families a wonderful Father’s Day. Our parents serve as our role models and do their best in helping us become good people in society. Have a wonderful time with your family today.
I want to start off this email by sharing a statistic that helps you understand that the pain you feel in markets is shared widely by many others.
You are not alone.
As of June 17th, 2022, with the SPX down 24% and QQQ down 35%, we can safely assume within the 60 million active 401K participants currently in place, that these accounts have depreciated substantially.
Exactly how much the average 401K has lost in value is not my focus.
Where my concern lies is in how to help YOU recover faster than the market by taking advantage of bear market rallies and sidestep more implosions that could very well be coming our way.
Now let’s get into it: I want to give you an update on the state of the markets so that you think objectively and understand the facts of this environment.
We are at 8.6% headline CPI inflation
Current Fed Funds rate is 1.5-1.75%. Fed says getting to 3-3.5% is a realistic year-end goal. This translates to roughly 7-8 (25BP hikes).
30Y mortgage rate now above 6%
New construction of homes falls 15% in May
Housing affordability is worst since 2007
The average bear lasts about 9.6 months and has roughly three ~10% bear market rallies. We’ve had 2 bear market rallies so far (none of which were greater than 10%)
S&P 500 VIX and Nasdaq-linked VXN are at levels that indicate volatility but not widespread panic.
Crypto is going through a shakeout (see my Tweet at the bottom of this email)
Value stocks have completely faltered (VTV ETF)
While all of these bullet points sound like a recipe for continued disaster in markets, I want to kindly remind our community that markets do not up or down in straight lines without some chops in between.
Based on the inter-market data that I am looking at, I believe that while we can of course can see further weakness, we may see another counter-trend rally soon.
In terms of how soon, I monitor this every single day in our Community.
I can’t tell you exactly when it’s coming (that’s impossible), but I believe the probability of one coming is increasing.
I am watching the tape very closely, and if you want to make sure you’re on top of the pivots, you should join me.
Now the problem is the not anticipating the bear market rally, but perhaps understanding what will happen after.
Unfortunately for many people (who are not on my email list, which you should share by the way), they believe that any bear market rally could be the end of the current trend and that we are going to be back on our way to all time highs.
Trust me, I want all-time-highs as much as you do, but I would be doing you a disservice if I shared that opinion without the facts/environment to back it up.
I want to give more nuanced opinions and ones that you can actually use to plan for yourself.
If you’ve been following my public work where I strongly hint at my research conclusions or you’re in my investment community where I tell you concretely actionable strategy, you would remember the following:
In early May, when US technology was severely discarded, and I discussed that a counter-trend rally is looming, BUT to IMMEDIATELY evaluate your long-term strategy (translation: DO SOMETHING to cut risk during a counter-trend rally). The S&P 500 and Nasdaq staged a powerful rally where my Community took this opportunity to de-risk into the rally when SPX reached 4150+.
The guidance where we discussed the Snapchat earnings disaster being a clear buying opportunity within the counter-trend rally (SPX 3880 to 4150+) as Snapchat is NOT a bellwhether. $SNAP is no $META or $GOOG. Not even close.
The guidance where we discussed SPX 4150-4200 as a region for risk reduction given that headline narratives had evolved to an extent that portrayed the economy going to easily get through this inflation/high interest rate environment
The guidance where we discussed China being a tremendous opportunity to play the divergence between central banking policies. I’ve talked about this on Youtube over the past couple months. Unfortunately, many listeners always think that whenever I post macro research, it needs to happen right away and that if my opinions don’t play out within a couple weeks then my opinion is invalid. The Impatient (of which there are many) will never be able to take advantage of my research, and they will always be unsuccessful in markets.
Video made on February 28th, 2022
…And just several months later in June, here is what we see…
If you are patient, flexible, and open-minded, You will be among the segment of the investor class who will be fully able to leverage my research/insights to the next level.
Trust me - you will want to navigate this next bear market rally appropriately.
You need to be using every single bear market rally to properly position yourself so that you mitigate some of the pain that this market is going to face over the coming months as the Fed gears up for further 75BP hikes until the inflation peak is objectively here.
Look, like I’ve said before. Go get guidance.
You can get this guidance from me.
Or you can get it from other people.
No matter what you do. Get guidance from Mentors who you trust, and be proactive.
People who refuse to invest in themselves will pay an even bigger price in markets- that I can promise you.
This bear market has exponentially evolved me into a prudent risk-manager in markets.
When all is said and done in this bear market, I am in the camp that there will be generational buying opportunities that will change lives forever (for the better).
Unfortunately, many people will NOT be able to take advantage of this crash.
I hope to help you become one of the few who do.
And along the way, help you develop the Analyst skills to read the market that will last a lifetime.
I’ve delivered on the most important opinions on major market pivots to my Patreon Community in 2022 with high-quality (and very easy to read) research.
~3650 SPX seems scary to the average investor.
Not to me.
Not to us.
And hopefully, soon, not to you as well.
Before we wrap up, I want to take a moment to thank Interactive Brokers for being one of our Channel’s trusted Partners. They have world-class international trading features such as being able to buy HK-listed shares or on-shore China stocks.
If you are concerned about China’s ADR delisting issue, know that IB allows investors to buy HK-listed shares to avoid any hassles if that event occurs.
Interactive brokers allows investors to buy HK-listed shares of Alibaba, JD, Tencent, and other brand name Chinese Internet companies on the HK market. Click the links to check out their features. Their website is very informative.
That’ll do for this short update.
If you’re looking to truly understand the investing environment we’re in, and want to support my research/work, let me help you inside my community. I’m on a mission to help people as many people as I can - hardworking, highly intellectual people like yourselves.
❤️ this email if you enjoyed the read. And see you in my next Youtube Video.
Until then, follow me on Instagram for some VISUAL commentary.
Your Investment Strategist,
Larry