We are on the wrong side of SPX 2900.
April was one of the strongest markets in stock market history, but then market was oversold at its lows. The market is a pendulum that over swings in both direction, and it might have temporarily overshot to the upside.
We saw on Wednesday a close in the SPX that was only 9% down for the year when the market was overbought to start with. In other words, the market could very well have discounted most of the possible negative effects of the virus – shut downs, unemployment, food chain disruptions, etc. It is important to remember than a 10% correction in an overbought market is normal AND healthy.
Yet, the world is still out of balance – what the Hopi Indians called “koyaanisqatsi”. Think about what is going on – and it is only the 4th month into the year. We have not even had the election dirty tricks start yet.
- We have record unemployment with no date of when things will open again, and how many of those people will be hired back.
- We have a presidential candidate, that by questionable polls, indicates he is in the lead, but is obviously intellectually impaired and may be sadly suffering from dementia. I stated before the year started, and I still maintain my opinion, that there is NO WAY they don't pull Biden off the stage and try to replace him with a popular woman—Hillary, Michele Obama, ….etc? This was one of my 2020 predictions.
- People don't realize it, but the world changed. The coronavirus sped up business evolution. We will see retail space and especially office buildings suffer. Companies are learning that unsupervised employees staying at home may work harder than in an office space riddle with “cubicle chit-chat”, “Superbowl pools”, “fantasy football”, office relationships (and bickering), etc. Why rent office space for $25 per sq/ft and have employees commute 2 hours a day?
- We have a deficit that has ballooned by another $2.2 trillion, and a Fed that just added another $10+ trillion air to the interest rate bubble. The universe is the only thing that expands forever.
- Kim Jung Un(stable) is auditioning for WEEKEND AT BERNIES.
- The American people (at least the ones paying attention) have stopped calling me crazy (for now) when I claim China is 10 times the enemy of the US than Russia. They are aggressively trying to F-k us over in technology, medicine, the economy, military, etc. They steal everything, and that is only outmatched by their ability to lie.
- We have seen governments throw out their Constitutions without people fighting back, all in the name of safety. We have a group of the population that will be frightened for the remainder of their life to go to ball games, concerts, etc. The mental health industry will be overrun. Yet the makers of Lexapro will be fine.
In short, things are folding inside out and even Nostradamus is needing aspirin for the year 2020. Parking under SPX 3,000 until we can see the horizon makes sense. A little profit taking for the people who had the balls to buy SPX -20%, -30%, or -36% would be the most sane thing anyone did this year.