Ever since May, the S&P has been down. With September’s 5.5% decline, followed by the 5.5% decline in August, we are now down for 5 consecutive months. The last time we had losing streaks like this was in 2002 and 2008 to 2009. In both cases, it led to a monstrous rally. Although I am bearish as a hairy human living alone in the woods, I need to be on guard (no Jerry) for an 8% rally in October.
The market has been grinding lower, led by the absolute destruction of basic materials, financials and tech shares. The leaders have been killed and people have pigeon holed themselves inside 80 year old man stocks. Coupled with the glaring fact that everyone is bearish, Zerohedge’s popularity is at an all-time high and I am 90% out of the market, something is astray, if I might so bold as to say so.
This just dawned on me, as I was doing some reading, thinking about the future. When thinking about stocks, I always lay out scenarios that might play out, then try to support them with historical precedence or hard facts.
The reality is, we are down 5 straight months and the news is as bad as it gets. Despite the bad news, we haven’t cracked lower. Instead, we are meandering around, grinding swing/momo traders into dust.
The real negative developments, aside from Europe, is the deterioration of China and the rise of Chinese CDS. What the fuck is that all about?
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