VRA Investment Update: Brutal Smart Money Hour. Investor Sentiment Flashing Buy Signals. Flatting Yield Curve and the Reality of Obama's 3rd Term.VRA 10 Bagger
/Good Thursday morning all. From +518 to -461 at the close, the Dow Jones had a near 1000 point reversal lower yesterday. An even larger percentage decline occurred in Nasdaq, which had a near 600 point swing.
Not what we wanted to see…not what I expected to see. Horrible smart money hour. Once again, Nasdaq new 52 week lows keep putting up big numbers as 571 stocks hit new lows. And this stat is attention getting; while the S&P 500 is down a tiny 4% from ATH, at the same time there are now 486 stocks in the S&P 500 down 25% or more, in the last 30-days. Brutal action underneath the surface, as mega caps continue to support the broad markets from exhibiting larger losses.
And we’re really seeing fear make its presence known (that’s bullish), as the AAII Sentiment Survey saw bulls collapse to 26.7% with bears jumping to 42.4% (highest reading since Sept 2020)
And wow. The Fear & Greed Index has plummeted to 22 (extreme fear). Just over 3 weeks ago it was 87 (extreme greed). Bearish sentiment like we’re seeing now is exactly how bottoms/reversals take place.
This morning, Dow futures are once again higher (+200) while Nasdaq is -40. The culprit? Breaking news from late yesterday that Apple is telling suppliers that iPhone demand is slowing.
As we’ve said for some time, and as Apple may now be witnessing, we are in Obama’s 3rd term. That’s likely what this decline is about. The US economy will only grow more slowly from here. And, if the Fed removes the punch bowl, we’ll be witness to a massive policy error as we head into midterms…Dems will get crushed even worse. Any Fed tapering will be short-lived.
We see the slowing US economy here, in the change in longer term treasury yields, since 10/1, as 10–20–30 year yields continue to decline. AKA, we are seeing a flattening of the yield curve.
Treasury Yield Change, Post 10/1, Bottom Line:
- Since October 1, the yield on 3-year notes has gone up 32 basis points.
- The yield on the 30-year long bond has fallen 26 basis points.
- This is a relative flattening of 58 basis points, or more than double what two 1/4 point rate hikes would achieve.
VRA Bottom Line; the markets (bond market vigilantes) are front running the Fed. If the yield curve continues to flatten, the word “recession” will be begin to be heard. While we do not expect a recession, we do expect growth will slow. Not go negative, but slow. This will become the next goldilocks set-up for higher stock prices, as the Fed pushes back their taper and rate hikes, and as 10 year yields keeps falling.
Trump Media (DWAC): We will soon be adding to our position in DWAC, officially bringing down our cost basis. DWAC jumped some 20% after hours on the news that they are raising $1 billion.
DWAC is a VRA 10 Bagger and must be owned, short, medium and long term. https://finance.yahoo.com/m/af64c690-aed3-3a13-bf56-04fc7058067a/digital-world-acquisition.html
Peter Navarro from yesterday, becoming even more direct about Fauci the Fraud. Until they start “publicly” talking about the 100’s of business deals with big pharma that Fauci has closed over the last 40+ years, as head of US healthcare (NIH), likely netting him more than $100 million (The Real Anthony Fauci, by RFK, Jr), the public may never wake up.
Until next time, thanks again for reading…
Kip
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