The NASDAQ hasn’t drawn down to this degree since January of 2008. We’re lower by almost 10% for the month. We traded down 11.8% in January of 2008, only to dive lower by another 4.8% in February. Back then the housing bubble popped and we were starting to realize the fundamentals were going to get real bad. We actually bounced hard in March, April and May–before bleeding out again in June–when the fundamentals started to mean something again.
Today, we are enduring the popping of another bubble: the great Chinese economic hoax, which has an ancillary victim in commodity price destruction. Let’s be clear, commodities are lower because Chinese demand is down. That being said, the economic ramifications of this bubble being popped probably won’t reveal itself until the second half of the year–around June, if I might be sold bold.
All things considered, February is supposed to be a good month for stocks. Seasonality trends favor many upside ETFs, as well as Bill Ackman’s fav VRX.
But we can’t ignore the parallels to 2008, can we? Actually, we probably can, at least from February through late May. I do expect the market will go higher soon (this week) and I’ve been anticipating further downside in February. But this oil and gas story hasn’t played out yet. Like MBS in the early 2000’s, oil and gas loans have been all the rage since 2009. There will be dislocations, which is why 25% of my assets are being held in TLT and that will not budge for the entirety of 2016.
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The banks are just getting continually poleaxed, the market clearly thinks they are lying about their energy exposure.
I would say it’s closer to 1937.
cnbc.com/id/100619889
Flat wages, fake out economic growth, tighter money supply, etc.
I have always called it the “Shanghai Copper Bubble”, same thing as a Chinese Bubble, but Copper was it’s first start in 2009. But Bottomline in this game, and only true rule….BUBBLES always POP.
I fail to see this week’s catalyst – Fed maybe?