I'm Calling It. We Are Close to the End of Selling and Huge Upside Is Ahead.
Sean Udall made a savvy call on the market just as the bears grew too confident.
Ok, I'm calling it. As usual I am probably early as that's been my MO for 4+ year writing TechStrat and the 7+ writing for the Buzz.
But in that time, we've had a lot of doom and gloom and calls for the death of the stock market. A heck of a lot of the time, I've been on the other side of those. That does remind me though. I need to dig up the most bearish piece I ever wrote which I also outlined the 3 Keys to what would stop the decline in stocks in 2008/09. It tooks a few months, but in March 2009 I got two of them, the most important being the repeal of FAS157 (Mark to Market Accounting). Again, that occurred in March 2009.
Back to the point, today while the averages are down a lot, the selling seems to be losing steam to me. I'm seeing the NYMO/NAMO complex getting far deeper into bottoming type levels though they could easily go a bit lower. Also, a lot of other internals are reaching near the lows we saw last October.
Today I'm seeing a lot more stocks trading higher or flat vs. the last few days where the averages were down this much, I was seeing 90-95% down days with wide swaths of stocks down 4-6%.
Today is pretty much a great big AAPL raid which is being used to push the averages lower. I guess they are thinking that iPhone sales were only being bought by the Chinese who were making 1000's of Yuan a day trading speculative penny stocks. If you believe that one, I have some Florida swamp land to sell you. Oh wait, a group of Chinese investors already bought that plot.
Back to the AAPL point. Can we please see some more stupid AAPL hit pieces on the Watch? I'm not sure I have time to post all this but I talked to Slice Intelligence, the latest to present negative AAPL Watch data. Suffice to say, I think Slice does the best with the info they have, but they certainly don't have "all the info".
Folks, I think it's worth mentioning that I worked for Visa at one time, helping them design and build their first multi-dimensional database. The program I championed didn't win the first field test but it won the war and ended up being selected. That company by the way was eventually acquired by IBM and I believe it's a key foundation for IBM Watson, though I can't prove it.
The point here, is I know data. I know how to analyze it, I know where the holes are etc... I asked Slice a few key questions about what they do and don't capture. Simply put, I know data and Slice doesn't have all of it.
I hate spending all this time on AAPL when talking about the market but clearly AAPL is a huge part of the market. After all it's like 17% of the Naz 100 and again, today is all about a big raid on AAPL.
Yesterday was about a whole lot more than just pushing AAPL around, and so was last week.
Face it folks, I've been talking about a stealth bear market for a good while. We are in it. I'd say the average stock is already down 20% if not more.
So let's see we've covered internals, we've covered AAPL, we've covered the average stock.
Folks this is "Gosh Dang" Bear market and has been in my view since March if not earlier. Thus the question is how long does it last. And how deep does it go? Oh how about, should we even be having a Stealth bear given the FED, Econ and stock price valuations?
Frankly, none of that matters, we are having the Bear. He's here and he's roaming. But this isn't new. The average stock has been getting it's teeth kicked in for weeks/months.
Oh and look at that Ma. Right on cue, AAPL bounces 80c and the Naz loses 25 of it's "AAPL Raid" downside points.
Ok -- the last thing I was going to talk about was the SOX. Remember all my vibes and writing about my hatred for the SOX esp. the high priced names? Well, since the last two of those I posted the SOX has peeled off a cool 100 PTs. That's right a 100 off of the 750 high. That's a 14% correction. Can the SOX drop 15-20%? ure it could but a huge piece of it is INTC and it's already on the floor. Another huge component is QCOM and it's really on the floor. Meanwhile, all my hated Semi's have rapidly dropped 10-20%. So the SOX could drop a bit more to say 15% decline, but given where the big components of the SOX are already trading -- INTC QCOM MU & TXN as another is down 18% from the highs as well.
Bottom line, I think peeling another 10% plus out of those SOX names (or other hugely beaten Techs) is going to be tough for Mr. Market to do. Thus I add up all the data points, the fear, the misinformation, and the feel of the Algo positioning... and to me it all adds to that I believe we are close to a lot of the selling being done. If not done, at least maybe 25-35% of individual stocks have declined enough that maybe we start seeing some differentiation.
Thus to fully WRAP this Burrito -- I'm close to increasing my position buying cadence and shorts are holding far less interest to me now than they did 2/3/4 weeks ago. On the long side, AAPL and QLYS might be my first two adds.
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