iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
21,906 Blog Posts

Markets Recovering Amidst Extreme Oversold Levels

Just to put this morning’s rout into perspective, the Stocklabs oversold algos went oversold on our 10yr algo. The last time that occurred was COVID lows in 2020. We had just 3.5% of large cap stocks rated bullish and in the past anything below 10% marked a short term bottom. Bear in mind, we are mainly day trading or swing and these pivot points are important on short time frames, no more than 10 trading days.

The bullish outcome here would be an invasion of Ukraine limited only to Eastern Ukraine with zero response from NATO. If Russia fucks with Kiev, we might see this spilling into the Baltics and we might see actual missiles hitting Warsaw by February.

Let’s assume we have hit a point in the narrative that the damage done to stocks is so severe it might limit the Fed response to tightening, although I doubt it. Then again, REAL stocks are now getting hit, with AMZN down 20% the past month and NVDA off by 27%. There is an array of stocks we once loved down by half and although tempting to buy them all — they just keep fucking dropping. Shares of SHOP and SE and many others are very tempting — but instead of opting for stocks I am focused only on two ETFs — biotech via LABU and tech via WCLD.

At session lows I was down 1.6%, even though I had UVXY into the open. I am now +20bps but not taking for granted the fact that the close might be collapsed.

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14 comments

  1. purdy

    Sen Johnson’s hearing may cast a pall over the future profits of our entire
    biotech/pharma industrial complex.

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    • traderconfessions
      traderconfessions

      LOL. Johnson polls lower numbers than Biden.

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      • purdy

        …and they may get lower still – depending on how successful deep state criminals are in mischaracterizing what was discussed this morning.

        Anyway, it’s about more that this heroic senator’s poll numbers.

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  2. purdy

    LABU still risky

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  3. iflyjetzzz

    I sheepishly bought the Qs a bit ago. Not willing to go nuts with anything more than a vanilla buy in.
    Felt like capitulation.
    Looks like the bounce is coming faster than I expected.

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  4. Mr. Cain Thaler

    Yeah it’s some tricky math. I really don’t think the Fed can save us now with commodities hanging near all time highs and wage hikes inbound from January year end reviews. Plus February is white collar bonus month.

    Also stocks aren’t the only thing following. Commodities are sheepishly following now too, which shows tight correlation between asset classes.

    If the Fed saves us, it’ll be after more lasting damage to inflation. Otherwise we get to live that Turkish lifestyle. Not sure they can pull that off before March without a massive collapse in energy and agricultural products.

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    • iflyjetzzz

      I view this as a dead cat bounce and fully agree with you.

      Inflation’s a lot worse and persistent than most are willing to admit. Of course, how many investors lived through the ’70s? If you haven’t, you don’t really know what it’s like to live with inflation.

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  5. roguewave

    Agreed, Vlad takes Eastern Ukraine. They’re mostly Russian & Russian speaking. No one will really give AF. You don’t transport pontoon bridges for military show.

    As with many countries’ borders, the lines were drawn to include at least 2 disparate groups. In some countries they are mortal enemies for generations. It’s an old Empire builders trick to keep the people fighting amongst themselves – easier to manage.

    Next China continues the HK takeover. Sorry to say, us is powerless to do anything of substance except for whining and a Severe chin-wagging and maybe a few meaningless idle threats about more sanctions. Sanctions are always very effective: e.g. Castro.

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  6. Mr. Cain Thaler

    Russell is green. I have to think stocks manage some sort of rally here, no?

    I think my preference is we get a nice relief rally, and in that time commodities get a stronger rally that sets them to the top of their channel. Then bonds sell off and take stocks lower. If commodities follow, they have a cushion to maintain the uptrend.

    What is the worst possible outcome for stocks here? Crash the close to the bottom or just float halfway where they are?

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    • traderconfessions
      traderconfessions

      The market will close at a level which makes people regret not buying and not selling.

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    • 2 wheels

      Looks we are going to keep gains for the close, but the big question is will it stick tomorrow or do we come right back down? I opened some positions today (first in 2 weeks) and am cautiously optimistic, but ready to sell ASAP if we don’t continue up tomorrow.

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      • Mr. Cain Thaler

        What’s the most painful thing tht could happen? 4,650? Everyone gets shook to death?

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        • discoordinated

          It appears to me that you are right and stock movements will be untrustworthy as long as commodities don’t sell off meaningfully.

          What help is coming if commodities are already pumped up.

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