Today Market May 2022

Maybe…. It’s difficult to tell. We should know for sure in about a week.

Alternatively, crypto investors could be starting to liquidate their coins en masse and pour into the growth stocks.

May be time to tiptoe into TQQQ. Any1?

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TLDR: We have no idea what we’re doing. We’re trying our best. Don’t get mad if we crash land this thing.

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TQQQ up more than 10%. Didn’t buy. Think too much, little action :grinning:

Btw S&P didn’t decline into the bear market territory, just to correct whoever say it had.

Glance through YouTube and Fintwit, almost everybody think is a bear market rally i.e. a new low will follow.

How many of them called the top vs. how many were bullish at the peak? The lack of bulls is bullish. We’re running out of sellers,.

Lol…I was definitely a seller.
I did notice several posters on seeking alpha rotating from commodities and oil to tech this week.

Agree if he is referring to S&P index fund/ etf. Be careful for individual stocks, could become insolvent.

Everyone going to cash. Full blown panic. Soon capitulation then anger and depression. Stay in your cash and be patient. Having said that is rare that S&P declines and stays in bear market territory for long. It has yet to be in bear market territory.

War ending? Cybersecurity stocks have been declining while broad market rallies.

Apparently many retail investors have been borrowing on margin to buy the dip even as their net portfolio values drop. People are talking about high return in a few years. However they have forgotten that is only possible if you stay solvent. On margin, as prices decline the risk of margin calls increase and accounts may be wiped out before market bottom.

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People like to buy expensive goods eg air tickets, and sell cheap assets eg stocks. :roll_eyes:

We have a looooooooooooooooooooong way to go before stocks can be called cheap. Historically a P/E of 15 for the S&P is average, anything over 18 is overvalued and cheap starts at about 12.

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P/E of S&P = 1/yield of 10 year Treasury

Current yield is 2.84%
So P/E should be 35
Current P/E is 20 which is lower than 35, so is cheap.

Incorrect to use historical without taking note of Treasury yield

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Yields are rising. The last time inflation got this high they needed to go to 18%. One can argue that that’s impossible today given the government’s outstanding debt but that only means we can no longer fight inflation and just need to let it rage.
What would that do to the markets?

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The bond market behavior indicates they are expecting a recession that’ll cool inflation with only the next two rate hikes needed.

I still think we’re in a recession right now. Q1 GDP was negative, and it will be negative in Q2. The decrease in federal spending is too significant for consumers to offset it. It’s not slowing down inflation though.

The fed has been unwilling to surprise the markets with interest rate moves that aren’t priced into the market. Something will have to give, since inflation isn’t improving. Either the market will have to realize more rate hikes are coming and start pricing for them, or the fed will have to surprise the market.

10-year was ~1.5% in December. Fed rates are up 0.75% since then, and they’ve committed to another 1% the next 2 months. That’d be 3.25%, and we’re only at 2.86%. For as much fear as investor sentiment surveys show, the bond market isn’t showing the same fear.