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Keep your eye on volatility. My view is that the $VIX has important horizontal support at 19.99, and a break above the descending trendline I’ve drawn (red circle on right) could spell an important turning point as we head toward September, traditionally the weakest month of the year.
Stocks that are considered overvalued can remain elevated for a long time before reverting to fair value and investors looking to short-sell such stocks can run the risk of entering the market too soon and getting stopped out. One of the eternal questions of investing is how to pick those stocks that are ripe and ready to fall versus those that still have higher to go. Timing, as ever, is key.
The U.S. stock market is trading just shy of all-time highs at the time of writing despite being in the midst of a global pandemic – a sign in itself valuations may be stretched – so it seems the perfect time to run a similar model to highlight stocks that are overvalued right now and vulnerable to downside.
(more…)Megacap semiconductor maker Intel (INTC) is down a double-digit percentage. In a normal market, this would mean an overall market crash, but, meh……….
Excerpted from this week’s edition of Notes From the Rabbit Hole, the Opening Notes segment of NFTRH 602:
As we noted in March while it was happening the sentiment environment became terror-stricken. Not fearful. Not over-bearish. Not even a contrarian extreme. Market sentiment was marked by full frontal terror as indicator after indicator (ref. Sentimentrader’s historic readings week after week) got slammed to epic over-bearish proportions.
Into the breach sprang the Treasury (i.e. taxpayer) backed Federal Reserve to the rescue. As the employment numbers come in at the tragic readings that we all saw coming the bears are out there beating a drum (ah, Twitter) about why it is not right, why the Fed cannot print a bull market, why the stock market is going to make new lows and why you should avoid stocks! They have been saying this since the terror-stricken days of March and they are still saying it now.
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