Russian Bear Causes Nasdaq Bear?

As Nasdaq enters a bear market, where are the opportunities? Were you forwarded this email? [Sign-up to Rude Awakening here.]( [Unsubscribe]( [The Rude Awakening] If there’s anything you’ve missed as part of your membership to Rude Awakening, make sure you check out our website where you can find archives, updates, and everything else that's included in your subscription. You can access it by [clicking here now](. Russian Bear Causes Nasdaq Bear? - On Monday, the markets opened (and closed) ugly with all the majors down. - In particular, the Nasdaq composite enter an official bear market. - That means the Nazzie is down 20% from its most recent high. Recommended Link [Russia, Ukraine and YOUR Money!]( [Click here for more...]( Russia SHOCKED the world when it invaded Ukraine… And caught almost EVERYONE completely off-guard. But ex-CIA insider Jim Rickards saw it coming TWO months BEFORE Russia’s invasion… And today, Jim is releasing his most critical prediction yet… A [disastrous event]( he’s eyeing for March 10th at 8:31am. [Watch His Critical Interview Here]( Sean Ring Editor, Rude Awakening Good morning on this fine Tuesday! I think we all knew Monday was going to be a shocker, but this was a sharp selloff. Almost immediately, and then throughout the day, the stock market got hammered. No kind words from Father Fed; no soothing chants of last-minute buying; no talk of putting off rate hikes. And this is where I think Fed accommodation turns into Fed obstinancy. Because if you’re a central bank tasked with keeping your stock market afloat - and don’t give me the price stability and economic growth stuff - then you should be having second thoughts. Unfortunately, American politicians figured out it’s much easier to get re-elected when there’s a bull market on. That’s because most Americans’ retirement savings are in a 401(k) or Roth IRA. It’s the same reason the Bank of England constantly gooses the housing market in the UK. Because that’s where the British keep their retirement savings. “Safe as houses” is a prominent UK saying concerning investments. We’ll see about that shortly, methinks. But back to the big equity market in the US. The trouble is now apparent to everyone. Hopefully, some of the froth will be taken off the market. But the danger is this: when investors get antsy as a whole, we don’t just revert to the mean. We usually fly right past it in an overcorrection. And yet, there’s an opportunity here. In this edition of the Rude, I’ll lay out my thesis for Q2 of this year. WTF Was That? Like the drunk who says the following day, “I shouldn’t have had that last one!” we’re conveniently using an invasion on the other side of the world to mask what was already a huge problem. When you shut down the world economy over a virus of both dubious origin and lethality, you’re going to have consequences. When you print money like a sugar-addled toddler, you’re going to have unintended outcomes. And when you combine both of those things, you’re going to have supply chain issues. None of that is surprising to any of us… well, maybe it is to the leftists in Congress who think we magically shoot oil out of our asses. Nevertheless, when you add up all those things and then top it all off with an invasion, you’re going to have economic dislocations. One of my LinkedIn buddies - goodness, I hate that place and must stop visiting - exclaimed to me, “See, Seanie, oil’s up $15! Told ya!” To which I replied, “I think you forgot about the $115 that came before it.” That’s the end of that conversation. Anyhoo, the stock markets are really getting into a bearish mood. Since revenue minus expenses equal income, and expenses are rocketing, this shouldn’t shock anyone, either. Here’s a rundown of yesterday’s mess, which looks like the market version of the Red Wedding: Credit: Stockcharts.com There’s nothing good there. And that little green bit at the bottom that gives you hope? Well, that’s the VIX, the last thing we want popping now. But before I get to the VIX, let’s quickly view the Nasdaq. Nazzie Bear As of yesterday’s close, the Nasdaq entered an official bear market. That means it’s more than 20% down from its most recent high. As the Nasdaq constituents - especially Big Tech - are a massive part of the S&P 500, this portends less confident times for our primary equity index. The S&P 500 had a terrible day as well, but isn’t down over 20% yet. It’s merely in correction territory, not bear market territory. Yet. The VIX The VIX is a measure of the volatility of the SPX. It’s derived from the prices of SPX index options with near-term expiration dates and generates a 30-day forward projection of volatility. Basically, it’s a fear indicator. The higher it is, the more fear there is. I put a horizontal line on the chart below at 15. Anything below that level, everything is hunky-dory. Above it, we’re mildly concerned. Above 30, we’re very concerned. Right now, the VIX is at 36. We’re right to be concerned. As an aside, those two huge spikes over 80 were the 2008 Financial Crisis and the Covid Crash of 2020, respectively. The VIX at this level is another piece of evidence that the market is uncomfortable with the economic situation. The NYSE Percent of Stocks Above the 200-Day Moving Average As JC Parets of allstarcharts.com says, if this indicator is below 15, you want to be out of stocks. Sure, but by that time, the markets have usually already crashed. Interestingly, and I’m just eyeballing it here, it looks like when this indicator falls below 27, it almost invariably goes to 15. Right now, we’re at 32.57. That means under one-third of the NYSE-traded stocks are over their 200-day moving average. So I’m watching this like a hawk. Recommended Link [Trump’s Secret Tech Revolution ($15.1 trillion at stake)]( [Click here for more...]( What if Trump recently did something that could see him become a HERO in Silicon Valley? According to the man dubbed “The Tech Prophet” by Forbes, it’s true. A single Federal Ruling in the final year of Trump’s presidency could be about to unleash a tech revolution worth an estimated $15.1 trillion. In the words of one tech insider – a CEO who works closely with Microsoft, Intel and Google – it “will rewrite the rules of what is possible.” And it could create countless ways for you to grow your wealth. [Full Story Here]( Fibonacci Retracements - So Where Are We Going? I’ll spare you the course on the Fibonacci numbers and levels, as I’m running out of room. But here’s a great explanation from [Stockcharts]( if you’re interested. Andrew Pancholi of the Market Timing Report put a chart in his latest newsletter that I found compelling. I replicated it here: Before I explain it, let me tell you that Fibonacci levels are alert levels. They’re not absolute signals by any means. If there were only one signal, we wouldn’t have three levels to look at, right? So I’m looking at the market from the 2009 bottom to the 2021 top with the bright blue lines. And I’m also looking from the Covid bottom of 2020 to the 2021 top with the black lines. What’s interesting is that two Fibonacci levels coincide nearly exactly, and that’s at the 3212-16 area, which I’ve circled in red. It’s important to note this doesn’t necessarily mean the market will fall to this level. We’re just trying to put the odds in our favor. Nevertheless, I must admit I like the idea of shaving another 1,000 points off the SPX. That kind of move matches my view that the market is overpriced. So it’s confirmation bias at its height, be warned. A Bit of History Another straightforward chart I like is the 200-day MA plotted over a long period of the SPX. Actually, the 9-month MA is roughly the 198-day MA (22 x 9 = 198), but we don’t have to split hairs here. What you’ll notice is that before both the Nasdaq Crash of 2000 and the Financial Crisis of 2008, we had plenty of time to get out before the bottom. We had months, not days or weeks. And I don’t even think the world is ending yet. That last red stick is this month’s candle, so it’s certainly not complete yet. So if the market is going to take a nap for a bit, we’re still early. Let’s keep our heads about us when everyone else is losing theirs. Wrap Up I’ve presented evidence that corroborates my macro view that the market is entirely overcooked and is due for a more significant move down. With the Nasdaq entering bear territory, the SPX in correction, the VIX elevated, and NYSE Percent down to near-dangerous levels, and an idea of where the next SPX stopping point may be, it’s a good story. But it’s only a story. If the Fed comes back in with a new punch bowl, all bets are off, and the story immediately changes. If peace suddenly breaks out between Russia and Ukraine, all bets are off. I don’t think that’s likely until Putin accomplishes his goal. NATO and the US certainly aren’t keen on peace. They’re upping the ante. Finally, you’re ultimately allowed to disagree with everything I wrote. But before I go, my erstwhile mentor and friend Addison Wiggin did an excellent "Crypto in Wartime" Wiggin Session with James Altucher last week. I didn’t cover crypto in this Rude, so why don’t you head on over there to watch it? James is as informative and entertaining as ever, while Addison tees it up for him. Here’s [the link]( so get another cup of joe and enjoy it now. By clicking this link, you will receive a free subscription to Wiggin Sessions and offers from us and our affiliates that we think might interest you. You can unsubscribe at any time. [Privacy Policy](. 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