S & P 500- Volume - comparison
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I wanted to point out some volume observations compared to previous selloffs. This could be end of month action along with other catalysts. Next week I think will tell us more about this move, is it the start of a larger one down or is it temporary? The volume the last few days on the sell side is showing to be fairly strong.
There are a few market conditions and economic situations developing that point to some significant pullback in our economy. They wont be able to hide it much more or buy it with QE or stimulus much longer. Gas and propane are in short supply. The computer chip situation is nearing crisis levels, the ripple effect of COVID shutdowns are creating small waves now. The small waves will become much larger ones and one example is the automakers reporting they have to halt production or slow as much as 30-50% because they dont have parts and materials needed to produce vehicles. Last year the 2 months that many of them shut down caused the values of pre-owned to leap up due to a shortage of available new vehicles. What we are looking at in this situation is a problem 2 to 3 times as bad as that was. This is in just the auto industry. Many goods use computer chips and there is a major shortage of them.
Home prices are far out of wack, only kept in line by record low interest rates. The rates are showing signs of rising, which can upend the home situation overnight. There are a lot of things being propped up by throwing money at it but we are now hitting the point where the world simply either needs to get back to work producing things or face the real fact that things to keep people alive are not being produced right now and you cant just trade printed money around and make it better. A storm is brewing here, this is just a small warning. Especially when you are seeing stellar earnings reports on companies, and they are still selling off pretty hard. One little catalyst here can cause a giant correction at this point. Look what it was last year, what shouldnt have happened was the reversal back to all time highs. There is serious damage done to the worlds economy and its being hidden right now.
There are a few market conditions and economic situations developing that point to some significant pullback in our economy. They wont be able to hide it much more or buy it with QE or stimulus much longer. Gas and propane are in short supply. The computer chip situation is nearing crisis levels, the ripple effect of COVID shutdowns are creating small waves now. The small waves will become much larger ones and one example is the automakers reporting they have to halt production or slow as much as 30-50% because they dont have parts and materials needed to produce vehicles. Last year the 2 months that many of them shut down caused the values of pre-owned to leap up due to a shortage of available new vehicles. What we are looking at in this situation is a problem 2 to 3 times as bad as that was. This is in just the auto industry. Many goods use computer chips and there is a major shortage of them.
Home prices are far out of wack, only kept in line by record low interest rates. The rates are showing signs of rising, which can upend the home situation overnight. There are a lot of things being propped up by throwing money at it but we are now hitting the point where the world simply either needs to get back to work producing things or face the real fact that things to keep people alive are not being produced right now and you cant just trade printed money around and make it better. A storm is brewing here, this is just a small warning. Especially when you are seeing stellar earnings reports on companies, and they are still selling off pretty hard. One little catalyst here can cause a giant correction at this point. Look what it was last year, what shouldnt have happened was the reversal back to all time highs. There is serious damage done to the worlds economy and its being hidden right now.
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ADP gave a sneek peek of payrolls this morning, it came in much lower than expected, the real report is likely to be not good. Some of that move is likely already baked in but my sentiment is to play to the short side and sell on spikes for scalps. If a stimulus passes, then we'll see a move to the upside for short term or else I'd have a lot heavier position short
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