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Michael Kramer and the clients of Mott Capital own DIS, NFLX, GOOGL, MA, V
Whether we are getting closer to a bottom is yet to be seen, but it would seem that now even the safety trades are being tossed out the window. The Utilities ETF (XLU) fell over 4% today! They have fallen 10% in just the past two weeks! This is suppose to be a safe haven! There is no place left to hide in the market.
The VIX is now surging and has risen to about 35, which is starting to get a level that would suggest extreme fear is entering the marketplace. Where was the fear on the way down, which still perplexes me?
The Russell 2000, for now, has held at least for today held the 1,266 level, if you consider closing right on it holding. Not that it means anything, because we can see there is a sharp downtrend in this index which has developed since it failed at 1,394. This I do believe will be the index to watch for a shift in sentiment. It was this index that topped out first, and it is likely the index that will bottom first.
The NASDAQ has been stuck in that same horrible downtrend as well, and support for this index currently rest around 6,180.
The technology XLK ETF is now falling to a technical uptrend which has been in place since the 2009 lows. We can see that the ETF moved above that upper range at the beginning of 2017, and it would appear that we are now heading back towards that channel.
We can see the same happening the XLY.
I guess if there is some good news it is that Alphabet was flat on the day, and the stock continues to hang “around the $1,000 price”.
Facebook fell today, and this chart still looks horrible and what good news is coming from this company lately. $115 seems likely.
At this point Amazon is trying to hold support around $1355, but why couldn’t it fall to around $1200? At this point, anything is possible, right?
Even Disney is getting crushed, how can you bet against Mickey Mouse? $100 is a critical level. By the way, Netflix has an excellent movie on Walt Disney and his life. Great to watch today or tomorrow.
Microsoft may be on its way to its uptrend around $92.
Mastercard was unchanged today, I have no idea why. Does it mean anything, I’d say yes, but Visa is down, so probably doesn’t mean much of anything.
Anyway, just wanted to leave all the people out there gloating about the stock market sell-off claiming victory saying things like how it is just a house of cards, or what do you expect when QE unwound or blah blah blah, something to think about. Did you at one moment think about how much pain a depression or deep recession can cause? Did you ever think that the Fed and central banks around the world had no choice but to embark on the aggressive measure they took at the time?
I had the fortunate pleasure of talking to my grandmother about the great depression in 2008 and 2009 when she was 94 and it was no a fun experience for her. She wasn’t a kid at the time, she was in her 20’s and raising a very young family. Now I’m not trying to equate what is happening today to what happened then, but it is exactly why the Fed did what they starting in 2008. What was the alternative to QE and low-interest rates? The alternative would have been a depression or something potentially worse than that of the 1930’s? If you were working at a financial institution during the 2008 and 2009 financial crisis then you know that economy was facing a very bad scenario and if the Fed had not taken the steps it took at the time, things would have most likely made the 1930’s look easy.
I don’t know about you, but my desire for the stock market to bottom and lift is for no other reason than wanting to live in a prosperous country and for my children to have all the benefits of life that I had and better. The stock market is a barometer for the economic health of our country, it was where companies can go to raise capital to build the technologies of tomorrow.
Betting against a stock or a sector is one thing, but betting against the stock market and the US economy is another.
Here is more perspective.
Wedensday we will be back to our normal schedule.
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