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Nobody Say ‘Selloff’
Someone suggested Tuesday that "selloff" seemed like something of a misnomer.
Intermittent weakness and a burgeoning tech pullback might more aptly be described as a healthy development considering stretched discretionary positioning and valuation extremes. It's the tried-and-true "cleansing" spin. "Cleaner" positioning will lay the foundation for the next move higher, we're told.
There's usually some truth to that. But you'd be forgiven if you're at least slightly concerned about tech. Monday
Looks like a rough ride going forward. However, I believe that supply chains will work out the kinks; the chip shortage will resolve; and the Federal Reserve, in collusion with other major central banks, can not afford to let rates rise too high. Ultimately, I find it hard to believe that with all the cash floating around and more being printed- that stocks will not benefit.
I have already proved to myself that making one good call on the market is worthless. You have to be able to time when to get out AND when to get back in- which is beyond my capability.
This is exactly why earlier this year, I reshuffled some out of SPY and into some higher dividend paying stocks.
The supply chain issue isn’t going away any time soon. I read over the weekend that lumber mills are looking at 18 months to get back to keeping up with demand. Rare earth minerals required for green tech and semi-conductors are not able to keep pace with demand. And then you have the whole evergiven debacle which is backing up the shipments on the already constrained supply chain even more.
If we keep printing money at some point it fails to provide enough benefit to offset the risk it’s creating. I think we are way past due for this bubble to pop and the longer we try to prolong it, the worse it will be for everyone.
A very successful CFP I follow who has weathered his clients through the past two bubbles fairly unscathed watches the S&P 500 10 month SMA. When a majority of days fall below that line or the line points negative, it’s time to start selling.
“When a majority of days fall below that line or the line points negative, it’s time to start selling.”
That rather strikes me as selling at the bottom, a punter’s mistake. Shouldn’t you friend be buying at the bottom?
Time to take another look at the REE’s.