Tag Archives: Stock Prices

WHOOSH, Go Stocks, Make Mess. Amazon Leads. Biggest Stocks Fall Apart. Crappy April. Terrible First 4 Months. ARKK now -70%, by Wolf Richter

The only mystery is why it took stocks so long to start doing what they’re doing. From Wolf Richter at wolfstreet.com:

But the mayhem started beneath the surface in Feb 2021.

Stocks on Friday turned Thursday’s blistering beautiful rally into a miserable dead-cat bounce. And it put some marks into the sand.

The S&P 500 Index dropped 3.6%, the worst drop since June 2020. The index is down 14% from its 52-week high and has turned red year-over-year (-1.2%). For the first four months this year, the index is down 13.3%, the third-crappiest beginning of a year, after 1932 (-28%) and 1939 (-17%).

The real fireworks took place at the Nasdaq, whose composite index plunged 4.2% and is now down 23.9% from the its intraday high in November, and down 11.7% year-over-year. For the month of April, it dropped 13.5%, the worst month since October 2008, which was the month following the Lehman bankruptcy.

Continue reading→

Now Alphabet Breaks, Microsoft too, Meta Already in Free-Fall: One by one, the Giant Stocks that Held Up the Market Let Go, by Wolf Richter

They’ve been taking out the small fry for months; now they’re going after the big boys. From Wolf Richter at wolfstreet.com:

The Nasdaq fell 2.6% today and is now again down over 20% from its peak last November. A lot of stocks got hammered today. But it was the giants that stole the spotlight. They’re now letting go.

Hundreds of stocks have plunged since February 2021, one after the other, the most-hyped stocks taken out the back and shot, down 70%, 80%, and even over 90%, often just months after they started trading as a public company. I’ve document some of them in my Imploded Stocks column.

Continue reading→

How Long Can Lies & Control Supplant Reality & Free Markets? By Matthew Piepenburg

Financial asset prices have completely detached from the underlying economy. From Matthew Piepenburg at goldswitzerland.com:

The facts of surreal yet broken (and hence increasingly controlled and desperate) financial markets are becoming harder to deny and ignore. Below, we look at the blunt evidence of control rather than the fork-tongued words of policy makers and ask a simple question: How long can lies & control supplant reality?

The Great Disconnect: Tanking Growth vs. Supported Markets

It’s becoming harder to keep up with the increasingly downgraded GDP growth estimations from the Atlanta Fed.

As recently as August, its GDPNow 3q21 estimates for the quarterly percentage change was as high as 6%.

But within a matter of weeks, this otherwise optimistic figure was cut embarrassingly in half.

Last month their GDP forecast sank much further to 0.5%, and as of this writing, it has been downgraded yet again to 0.2%.

GDPNow Real GDP estimates

Needless to say, 6% estimated growth falling to effectively 0% growth is hardly a bullish indicator for the kind of strengthening economic conditions which one might otherwise associate with risk asset prices reaching all-time highs for the same period.

The current ratio of corporate equities to GDP in the U.S. (>200%) is the highest in history.

Markets are at an all-time high according to the buffett indicator

Continue reading→

Fracking Blows Up Investors Again: Phase 2 of the Great American Shale Oil & Gas Bust, by Wolf Richter

Fracking may be the greatest thing to ever happen to US oil and gas production, but it’s having a hard time paying for itself, especially when the cost of copious amounts of debt is thrown into the calculations. From Wolf Richter at wolfstreet.com:

Including billionaires who thought they’d picked the bottom in 2016.

In 2019 through third quarter, 32 oil and gas drillers have filed for bankruptcy, according to Haynes and Boone. Since the end of September, a gaggle of other oil and gas drillers have filed for bankruptcy, including last Monday, natural gas producer Approach Resources. This pushed the total number of bankruptcy filings of oil and gas drillers since the beginning of 2015 to over 200. Other drillers, such as Chesapeake Energy, are jostling for position at the filing counter.

Chesapeake has been burning cash ever since it started fracking. To feed its cash-burn machine, it has borrowed large amounts and has been buckling under its debt for years, selling assets to raise cash and keep drilling for another day. But its debt is still nearly $10 billion. Its shares [CHK] closed on Friday at 59 cents.

On November 5, in an SEC filing, it warned of its own demise unless oil and gas prices surge into the sky asap: “If continued depressed prices persist, combined with the scheduled reductions in the leverage ratio covenant, our ability to comply with the leverage ratio covenant during the next 12 months will be adversely affected which raises substantial doubt about our ability to continue as a going concern.”

Continue reading

The Ultimate Bear Chart, by the Northman Trader

You don’t have to be an expert in technical analysis to recognize from the chart below that the ratio of the Standard and Poors Index over the ten-year Treasury bond yield has decisively moved below a long-term trend line. Treasury yields are moving up relative to stocks, which last week moved down. The ratio may be forming what’s called a head-and-shoulders formation. If the trend continues it means interest rates will continue moving up and/or stock prices will continue moving down. From the Northman Trader at northmantrader.com:

“There are two bubbles: We have a stock market bubble, and we have a bond market bubble” – Alan Greenspan January 31, 2018

This may not come as a surprise, but: I agree with him. Oh I know, every time Alan Greenspan says something related to “irrational exuberance” immediately the comments come that he said it in 1996 and stocks didn’t blow-up until 2000. While that may have been true then it didn’t invalidate his premise nor is the timing relevant to now. Back then people ignored him and went full bubble mode until it popped.

Indeed this one may still go on for a while and 2018 upside risk targets remain despite this week’s first pullback action of 2018. However this week’s corrective move coincided with a sustained technical breakout in the 10 year yield above its 30 year trend line. Markets clearly reacted and not favorably.

Which brings me precisely to the relationship between stocks and bonds. If Alan Greenspan is correct then a chart I have been watching and musing about for a while may be the ultimate bear chart.

I’ve shown this chart before, but let me walk you through the theory of it.

This is a ratio chart of $TNX (10 year yield) vs the $SPX and yields a stunning picture:

The correlation is stunning to me from a technical perspective. Why? Because it is so incredibly precise.

Indeed, if Alan Greenspan is right, this chart could have enormous implications for the next few years. This chart could suggests a massive multi year bear market to emerge.

Let me explain why and how.

The ratio bottomed right near the 2008/2009 lows and, as you can see, we’ve seen a continued rise until the middle of 2016. In the years in between a trend line established itself that acted as precise support until the US election. That’s when everything went pear shaped.

Since then the trend line became resistance and the renewed effort to break above it rejected precisely at the trend line again in 2017. Given this history it seems hardly a coincidence, but rather suggests a technical relationship of importance.

Currently we see the ratio dropping hard this week. Why? Because stocks are falling and yields are rising. Which means that for this to move back higher yields must drop and stocks rise. Or at least yields need to stop rising.

To continue reading: The Ultimate Bear Chart