200324 This isn’t over!

I got some Permi- Bull friends that keep calling a bottom and keep trying to catch this falling knife. I know and understand the temptation. Fell for it in 2000 to my regret. My notes to them:

But anything will be short lived. The Fed announcement today that they are buying bond ETFs lead to a rally.

Until people had some coffee  and said “I didn’t know the bond market was that f-ed the Fed has to get involved!” We are, as Koreans say, in deep kimchi. The credit market is failing and its massive compared to the stock market.

I think we are into this correction about where we were in Oct 2008. People seem to believe a bailout will create a V shaped rally. V’s happen in bull markets. Not in  Bears.  Bear markets last 4-9 months. This is month #1.

Last 12 years has been marked by a lot of V’s (Chart below) A decent Bull Market trains people into almost robot like programming “to buy the dip”. The last Bull we had was one for the ages! ITS OVER!

After all the destruction in recent weeks, seemingly people cannot wrap their noggins around that truth. The situation is fundamentally changed since last month. The Fed cannot save this. Neither can Congress nor Trump. Collectively we are in a rough patch and it’s portfolio  suicide to do what TV pundits suggest… “Buy the Dip!” They are paid to say that! Yes, from my perspective its OK for ME to buy a bit on AMZN, NFLX, ZM, RNG. Nibble only! Its not the apocalypse. But its not the end of the Bear, either!

The uptrend that happen in Bear Markets are called either Dead Cat bounces or Bull Traps. They often last 4-7 days. Sometimes longer. Suddenly, people are more afraid of missing out on the rally then they are of follow on losses.

Inevitably, a final fall happens that crushes their hopes and dreams. I suspect we won’t see a final bottom until after they remove the 10% penalty for early withdrawal from retirement funds.  The unemployed will demand that.  The day after that happens, hundreds of billions will head for the exit and never return. Terrified Boomers will bolt too. Then the market will make its final move down. 

That said- I’m nibbling a bit on some Amazon, NFLX, and Ring (RNG). Crime will rise. Ring is a good deterrent . Also the Gold Bugs are starting to make noise. They drove prices higher off the “Dollar is dead” argument.  They were right in 2009. They are more right now.