Interim Update Dec 15th 2021

[SOL]

While traders are making bank chasing Apple to a $3 trillion market cap, many in the market are adding cash to their accounts amid heightened concerns around the Omicron variant and a more hawkish Federal Reserve.

Bank of America's monthly fund manager survey out Tuesday found cash allocation among investors surged 14 percentage points in December from November. Fund managers were net 36% overweight cash, the highest allocation to the asset class since May 2020.

Besides cash, investors also rotated into defensive sectors of the market such as health care and REITs.

"Hawkish central banks spark a surge in cash and more defensive asset allocation," explains BofA strategist Michael Hartnett.

https://finance.yahoo.com/news/omicron- ... 03519.html

A positive development as uncertainty is rising and combined with investors moving into cash, it is a very long term bullish signal. If this trend continues and the markets pull back strongly next year it will be a clear sign that a hard correction should be viewed as a buying and possibly monumental buying opportunity. Fear never pays and when it pays.

[Budge]

While traders are making bank chasing Apple to a $3 trillion market cap, many in the market are adding cash to their accounts amid heightened concerns around the Omicron variant and a more hawkish Federal Reserve.

Bank of America's monthly fund manager survey out Tuesday found cash allocation among investors surged 14 percentage points in December from November. Fund managers were net 36% overweight cash, the highest allocation to the asset class since May 2020.

Besides cash, investors also rotated into defensive sectors of the market such as health care and REITs.

"Hawkish central banks spark a surge in cash and more defensive asset allocation," explains BofA strategist Michael Hartnett.

https://finance.yahoo.com/news/omicron- ... 03519.html

A positive development as uncertainty is rising and combined with investors moving into cash, it is a very long term bullish signal. If this trend continues and the markets pull back strongly next year it will be a clear sign that a hard correction should be viewed as a buying and possibly monumental buying opportunity. Fear never pays and when it pays.

Don't forget foreign money flow. As the rest of the world (especially the EU) becomes more and more unstable) big money will flow to the US. With treasuries less and less attractive and less safe, it leaves the large market cap equities, primarily DJIA.

[Triplethought]

Don't forget foreign money flow. As the rest of the world (especially the EU) becomes more and more unstable) big money will flow to the US. With treasuries less and less attractive and less safe, it leaves the large market cap equities, primarily DJIA.

Budge, what makes you think EU will become lest stable? I know China is looking iffy right now but why Europe? Because of the saber rattling over Ukraine? Or because Omicron is hitting them hard. As one democrat governor said Omicron is not an emergency

[bpcw]

Bit of a sell the rumour, buy the news day then!

[bpcw]

Sol et all, looks like quite a few of the tech stocks are correcting, especially big ones such as Nvidia and Tesla, do you see a continuation of this into the big correction next year or a turnaround soon into 1st quarter next year before the overpriced ones such as these two and others see massive corrections along with the general correction of the markets?

[SOL]

Sol et all, looks like quite a few of the tech stocks are correcting, especially big ones such as Nvidia and Tesla, do you see a continuation of this into the big correction next year or a turnaround soon into the 1st quarter next year before the overpriced ones such as these two and others see massive corrections along with the general correction of the markets?

If this trend continues then the first sell-off could be mild and the second sell-off wild. Fear levels are already high and rising. And a host of tech stocks have already shed in excess of 30%. However, the overall theme minus the short term gyrations remain the same, the big players are pushing the markets lower to create an opportunity. The COVID crash was the best proof of this strategy, and look where the markets are trading post covid

[bpcw]

Sol et all, looks like quite a few of the tech stocks are correcting, especially big ones such as Nvidia and Tesla, do you see a continuation of this into the big correction next year or a turnaround soon into the 1st quarter next year before the overpriced ones such as these two and others see massive corrections along with the general correction of the markets?

If this trend continues then the first sell-off could be mild and the second sell-off wild. Fear levels are already high and rising. And a host of tech stocks have already shed in excess of 30%. However, the overall theme minus the short term gyrations remain the same, the big players are pushing the markets lower to create an opportunity. The COVID crash was the best proof of this strategy, and look where the markets are trading post covid

Thanks Sol,

What I'm really after is, are we likely going to see tech stocks rebound in a Santa rally into the 1st quarter of next year or are they more likely going to continue correcting from here, if so shouldn't we be selling these stocks?

[MarkD]

Interesting day in the market. My accounts are up nearly 1% while the S&P is down nearly the same. Looks like rotation may be starting.

[bpcw]

Interesting day in the market. My accounts are up nearly 1% while the S&P is down nearly the same. Looks like rotation may be starting.

Hope so, interesting indeed!

[Budge]

Don't forget foreign money flow. As the rest of the world (especially the EU) becomes more and more unstable) big money will flow to the US. With treasuries less and less attractive and less safe, it leaves the large market cap equities, primarily DJIA.

Budge, what makes you think EU will become lest stable? I know China is looking iffy right now but why Europe? Because of the saber rattling over Ukraine? Or because Omicron is hitting them hard. As one democrat governor said Omicron is not an emergency

ECB has destroyed their bond market(s). Less a case of buyer of last resort, they are and have been the only buyer propping up the bonds. For ages they've begged the Fed to not raise rates, but Powell has indicated rate raises next year. Aims to pull money into US markets and fight inflation. Bank of England just announced an increase (oh dear). Financially, the EU is doomed. They will welcome/pray for the diversion of a shiny object like an invasion of Ukraine or a non-lethal Omicron or whatever they can dream up to distract the masses.

[Yodean]

What I'm really after is, are we likely going to see tech stocks rebound in a Santa rally into the 1st quarter of next year or are they more likely going to continue correcting from here, if so shouldn't we be selling these stocks?

I remind myself daily that it's a "market of stocks," not a "stock market."

Based on my sentiment measures, Santa appears ready to make an appearance soon, but as per the TIT's "Silent Correction" hypothesis, regardless of what the general equity indices do from this point onwards, some stocks will soar while others will plummet or tread water.

1) NVDA: has been extremely profitable for me; got in early, took profits slowly in bits on its parabolic rise up, still have a core HODL position; have been reaccumulating in micro-lots on dips since it dropped below $295, and will increase the micro-lots a bit if/when NVDA drops into the $260-$280 range; below $260, will accumulate a lot more;

2) TSLA: since I don't particularly like Musk, I don't hold any TSLA and it's purely a potential short-term swing-trade for me; back when TSLA was trading in the 300s to 400s, I traded this stock purely on sentiment measures (i.e. I didn't use technical or fundamental analyses for this particular asset), and on balance it was consistently profitable. I would just buy a bit of TSLA when sentiment was quiet or low, and sell when it was euphoric.

I plan to do the same with this stock during the Slaughter of '22. Previously, my plan to buy my 1st lot of TSLA at $450 - now, it's $750-$800. I don't plan to HODL this stock - it will be a pure swing-trade for me.

[SOL]

This weeks sentiment data, of which we have tabulated 90% indicates that uncertainty and fear are ruling the roost. So the odds favour a strong rally into next year. However, this rally is not going to be your typical Santa rally, it's going to zig and zag and maybe the January effect will be stronger than the Santa rally. However, for the market to pull back significantly bullish emotion has to soar and right now bullish readings stand at 22, Bearish at 40 and neutral at 38.

The anxiety gauge is still in the panic zone and the GP index appears poised to put in another new high.

Bulls 22
Bears 40
Neutral 38

[bpcw]

Thanks Sol & Yodean !

[jlhooter]

Can you explain a bit what a Santa Rally and Jan Effect are? Still very new to this stuff

[AstuteShift]

Can you explain a bit what a Santa Rally and Jan Effect are? Still very new to this stuff

The January effect is a hypothesis that there is a seasonal anomaly in the financial market where securities' prices increase in the month of January more than in any other month. This calendar effect would create an opportunity for investors to buy stocks for lower prices before January and sell them after their value increases. As with all calendar effects, if true, it would suggest that the market is not efficient, as market efficiency would suggest that this effect should disappear.

Santa Rally is just that a rally.
It’s been said that January is a barometer of what the market will do throughout the year also.

However, these seasonal old school thinking is not always set in stone