A negative day with the Dow Jones down 165 points (-0.68%) and the Nasdaq down 116 points (-1.54%).
Today’s market action was net bearish. We had a spike higher of nearly 300 points, followed by a 500 point drop.
This market action can be explained by what we have been talking about here over the last few days. Primarily, non-confirmation between long-term and short-term calculations. If you recall, longer-term calculations have…… If you would like to finish reading this forecast, please Click Here.
I really hate to do this to you, but there is yet another chart to worry about….
The concentration is even more pronounced if two popular names, Netflix and Amazon, are moved from their official home in the consumer discretionary category to the tech sector that they’re usually informally lumped with. With these two, “technology” comprises almost 60% of the winners’ portfolio in the past year, almost two times its weighting in the overall index.
By comparison, at the peak of the dot-com boom in March 2000, tech stocks comprised about 68% of the winners’ portfolio in the previous year. That was also about two times the weighting of tech stocks within the overall S&P 500 index back then, which was about 35% of the overall index.
In other words, everyone and their day trading grandmother is pouring money into just a few highly speculative and massively overpriced FAANG stocks. Take that away and the overall stock market wouldn’t be anywhere close to where the indices are today.
Still, there is even a bigger issue with all of the above. I am really not sure what investors expect out of these stocks. They are projecting high growth for these risky enterprises that will apparently never end. It’s a fools game. We all know what happens next. I will go even further. The stocks above offer the best short side opportunity in decades.
Most importantly, our overall stock market work tends to confirm this notion. If you would like to find out what happens next, based on our timing and mathematical work, please Click Here
