One more from me tonight, friends,
I keep staring at this chart which plots (the scatter-like print) ST rates vs. S&P earnings yield and also shows the S&P adjusted by M2 (purple).
I believe one or the other is likely true.
1/ we're in the middle of a mega bull run that began in '09 and never really ended, given low rates, tons of tech-led innovation (with cash flows) and the current correction is a pause (similar to the GREEN ARROW in '98) before continuing much higher and with rates remaining high and potentially even headed incrementally higher as stocks climb the wall of worry.
2/ we're undergoing a WTF growth scare, a geopol reordering, inability to look through for many months (or even a year) and causing such a financial meltdown that rates will be forced to head back to zero and stocks maybe undergo another 20-30% lower (the FROWNY FACES).
My guess is it's #1.
- the current spat is Trump-induced.
- it's not a meltdown of credit markets (well... yet...)
- there's not a fake _____ (event of any sort) causing freak out
- and also... unlike dotcom, which ran HARD, we've had some pullbacks along the way in this recent multi-year run, testing the thesis... notably mar '20 and end '22. these tech leaders are v cash generative and there's a good reason to believe they'll continue to gain strength
all this would translate into a massive run into '28, if #1 is correct.
so now that we're in pure correlation 1, margin call territory etc. etc. we have the "can't look through, need help or some resolution event"
so once that resolution comes. we probably boot, rally, retest. and rip.
hard to do this on leverage b/c V might not be the shape of recovery (at least that's not how i'd play it, i still prefer to use deep ITM LEAPS for some flex)
but let's see.
this chart has my attention once again.
V
I keep staring at this chart which plots (the scatter-like print) ST rates vs. S&P earnings yield and also shows the S&P adjusted by M2 (purple).
I believe one or the other is likely true.
1/ we're in the middle of a mega bull run that began in '09 and never really ended, given low rates, tons of tech-led innovation (with cash flows) and the current correction is a pause (similar to the GREEN ARROW in '98) before continuing much higher and with rates remaining high and potentially even headed incrementally higher as stocks climb the wall of worry.
2/ we're undergoing a WTF growth scare, a geopol reordering, inability to look through for many months (or even a year) and causing such a financial meltdown that rates will be forced to head back to zero and stocks maybe undergo another 20-30% lower (the FROWNY FACES).
My guess is it's #1.
- the current spat is Trump-induced.
- it's not a meltdown of credit markets (well... yet...)
- there's not a fake _____ (event of any sort) causing freak out
- and also... unlike dotcom, which ran HARD, we've had some pullbacks along the way in this recent multi-year run, testing the thesis... notably mar '20 and end '22. these tech leaders are v cash generative and there's a good reason to believe they'll continue to gain strength
all this would translate into a massive run into '28, if #1 is correct.
so now that we're in pure correlation 1, margin call territory etc. etc. we have the "can't look through, need help or some resolution event"
so once that resolution comes. we probably boot, rally, retest. and rip.
hard to do this on leverage b/c V might not be the shape of recovery (at least that's not how i'd play it, i still prefer to use deep ITM LEAPS for some flex)
but let's see.
this chart has my attention once again.
V
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.