Down goes the Dow

hmmm

I suppose the main thing I'm doing is trying to toughen myself up for the next one. Even after decades in the business I get scared like everyone else and sell when I shouldn't. (meaning on the margin - Of course I don't sell much).

One good piece of advice I read was to cut out the scary headlines from a past crisis and put them on the fridge or something like that, so you see them all the time. And of course we know now, with the fullness of time, that the headlines only scared people out and they would have been fine had they stuck their heads in the sand. This is a form of that.

Another thing I'm doing is trying to puncture the idea of being able to predict markets. These guys have access to all the information and are paid hundreds of thousands of dollars and still they are clueless.

A corollary is that if someone makes a *good* prediction I might want to follow that person a little more closely since he might be sensible. But given their badness at this...that will be rare.

I want to puncture the idea that wall street is always bullish. Clearly it isn't.

I like the idea of looking back at things and seeing how they turned out.

I like the idea of accountability.

I like the idea that I cut and pasted these months or years ago - delayed gratification is satisying. I collected these a long time before unleashing them on y'all.

Makes getting to work more fun - always having one or two of these to look at is pleasing.

probably more reasons.

the recovery from the financial crisis of 2023 has indeed been remarkable. Probably a sign of rude health for the economy in general.

The point I take away from this is that most predictions are a waste of bandwidth.

This whole thing about rebalancing of the Nasdaq 100 is an interesting one. This is it. The rebalancing will occur before market opens Monday, so if you own any of the big tech players, there may be some changes as of market close today. Lots of fidgetiness in markets today, atleast QQQ and those effected stocks.

Earnings Scorecard: For Q2 2023 (with 18% of S&P 500 companies reporting actual results), 75% of S&P 500 companies have reported a positive EPS surprise and 61% of S&P 500 companies have reported a positive revenue surprise.

Exactly, you have 10,000 "experts" predicting a stock market crash (Grantham, Hussman_ and another 10,000 "experts" predicting a stock market with all time highs. IGNORE THEM ALL!

We've seen a ton of bad calls....here's a good one!

An entire year ago, when inflation was 8-9% and spirits were low.

JPM got it mostly right by forecasting a soft landing and lower inflation.

James Pethokoukis
@JimPethokoukis
JPMORGAN: "Our outlook is broadly consistent with the desired soft landing, with job growth and GDP growth slowing while staying positive, the unemployment rate drifting up over time, and inflation moving back closer to target."

Not sure we have any technical analysis guys on the thread...maybe Gente if he pops up out of the heat.

Lots of indicators were flashing green 3-6 months ago, including this one. Worked well this time. Markets up since then.

Seth Golden
@SethCL
On Jan 30th Summation Index crossed 900 for 1st time since 2020. ( $SPX was 4017)
Historically, this is an extremely bullish signal of broad-based breadth momentum.
Forward positive return rate:
3-mnth = 88% (SPX 4169)
6-mnths = 85% (?)
12-mnths = 94% (?)

What is the Summation Index?

I think this is the one he's talking about but no promises.

investopedia.com

McClellan Summation Index: What it is, How it Works

James Chen

The McClellan Summation Index is a long-term version of the McClellan Oscillator, which is a market breadth indicator based on stock advances and declines.

Open link

“Investors often assume that extreme valuations imply that stock prices should fall, and that if stock prices don’t fall, the valuation measures must be incorrect. That’s not how valuations work. Valuations are informative about long-term returns and the extent of potential losses over the complete market cycle. Emphatically, however, valuations have very little to say about market direction over shorter segments of the market cycle. Think about it. If rich valuations were sufficient to drive stock prices lower, it would be impossible for stocks to reach valuations like we observed in 1929, or 2000, or early 2022, or today. The only way we got here – the only way we could have got here – was for stock prices to continue to advance through every lesser extreme.”

John Hussman, July 2023 Market Commentary (out today)

Yeah, maybe but I don’t think so. Google pointed me there also but when I looked at the description it says the McClellan Summation index is calculated by combining the McClellan Oscillator (whatever that is) with the Summation index. Which leads to a self-referential vicious circle, unless they are two different indices.

I’ve written on here before (under a different assumed name, hopefully it’s evident which anonymous poster I am…?) about my general disdain for most technical analysis. That said, it’s often tempting to get pulled into technical correlation rabbit holes. I can lose whole days looking into them, if only for the eventual benefit of learning to ignore them, but with the perpetual faint hope of discovering the golden goose. 🙂

I’ve never assumed that. Sounds like Hussman is making that up.

Is it July 2023 Market Commentary or July 2023 Market comedy? Are we really bringing Hussman up again? The guy is batting 0 for 125. He is 200 points below the Mendoza line. Can we please stop bringing his name up UNTIL he gets one of his 1000 predictions right?

Hussman is a certified idiot as is anyone who follows him.

“At present, the valuation extremes we observe imply that a -64% loss in the S&P 500 would be required to restore run-of-the-mill long-term prospective returns. I know. That sounds preposterous. Then again, as the chart below suggests, I’ve become used to making seemingly preposterous risk estimates at bubble peaks, having correctly anticipated the depth of the 2000-2002 and 2007-2009 collapses, as well as projecting an 83% loss in technology stocks in March 2000 (the Nasdaq 100 went on to lose an implausibly precise 83%).”

John Hussman, July 2023 Market Commentary

The NASDAQ 100 was at $920 in 2002. It is currently at $15,625. Did Hussman predict that?