QQQ - How much downside to go?
Just looking at purely technicals, the market structure is still overwhelmingly bearish. We still have not seen a massive Vix spike above 40 to signal a potential bottom (or start of something worse). I extrapolated out that last move down and it brings the QQQ into a logical zone. Previous ATH in 2019 before the covid plunge and it is also around the 61.8 retracement from the bottom of the covid low to the top in November 2021 peak. The cycle brackets suggest that this could be a left-hand translation as well which would be very bad and could create that waterfall effect and final capitulation to potentially that landing zone area from now out into March of 2023. Also, I don't see as big of volume selling as we did in the beginning of the year which could suggest we are closer to a bottom than most think. Have the sellers been exhausted or are they about step in and submit to final capitulation? Only time will tell.
Not a prediction, just an observation. React in real time and don't get stuck on one story because this market can flip the other way really fast if Putin admits defeat or China reopens (maybe even accepts a vaccine). Remember, inflation is the bear in the room, so we need to see the supply chain normalize, people to stop job-hopping or just go back to work in general or the feds will not stop until something breaks and trust me, that is already well underway.
From an investment standpoint, valuations are starting to look very attractive for a 3–5-year horizon. Notice how I didn't say next year or the year after. There are way too many geopolitical risks for me to think that this won't be a long-term bear market potentially for another year or two. That doesn't mean stocks won't bottom soon though especially the ones getting hit really hard for the last year or more. Valuations matter and they always will, and some stocks are just still too expensive in an environment where rates are being raised and demand is being killed.
None of this is investment advice and trade/invest at your own risk. Good luck to you all!
Not a prediction, just an observation. React in real time and don't get stuck on one story because this market can flip the other way really fast if Putin admits defeat or China reopens (maybe even accepts a vaccine). Remember, inflation is the bear in the room, so we need to see the supply chain normalize, people to stop job-hopping or just go back to work in general or the feds will not stop until something breaks and trust me, that is already well underway.
From an investment standpoint, valuations are starting to look very attractive for a 3–5-year horizon. Notice how I didn't say next year or the year after. There are way too many geopolitical risks for me to think that this won't be a long-term bear market potentially for another year or two. That doesn't mean stocks won't bottom soon though especially the ones getting hit really hard for the last year or more. Valuations matter and they always will, and some stocks are just still too expensive in an environment where rates are being raised and demand is being killed.
None of this is investment advice and trade/invest at your own risk. Good luck to you all!
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