Pandemic Traders Are Resurfacing

And With Them, Comes Overblown Hype [Morning Reckoning] January 30, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Pandemic Traders Are Resurfacing Baltimore, Maryland January 30, 2024 [Greg Guenthner] GREG GUENTHNER Good Morning Reader, We’re encountering some strange signs of froth in a few not-so-dark corners of the market in the aftermath of the late 2023 melt-up rally. Sure, the averages have soared off their lows and are teetering on new highs. But most stocks are beginning to churn as the spell of December’s disbelief rally begins to fade. Now, we’re entering a seasonally weak stretch for the stock market as Q1 of an election year historically brings choppy, sideways conditions. And, as Goldman Sachs notes, February has been the second weakest month for the Nasdaq over the past 40 years. Could these data points align with what we’re seeing in recent market action as we wrap up January trade? As the unflappable mega-caps continue to prop up the major averages, let’s check in on the other stocks that aren’t shooting higher every day: - Small-caps are lagging after breaking out as potential new market leaders in Q4. The Russell 2000 is down more than 1% year-to-date, while the Nasdaq 100 has gained more than 4.5%. - Growth names are taking a beating. Tesla Inc. (TSLA) has fallen from grace, breaking from its Magnificent Seven brethren after reporting disappointing earnings. It’s down 25% just this month. Meanwhile, tech-growth bellwether ARK Innovation ETF (ARKK) is also underperforming by a wide margin, down almost 9% year-to-date. - The VanEck Semiconductor ETF (SMH) is starting to sputter after trading at nosebleed levels just last week. The sector is finally losing steam following an ugly earnings tumble from Intel Corp. (INTC). Even the most optimistic tech junkie would admit that these impressive stocks could use a break here… While stocks aren’t triggering any terrifying “sell everything” moments, it’s not difficult to envision the averages hitting a rough patch – especially as some familiar faces from the Pandemic Bubble reappear on the airwaves. [URGENT: Your $588.88 Credit Is Now Available.]( I am pleased to announce that you've got an immediate $588.88 credit for our research you can take advantage of… [Please click here immediately to learn how to claim this credit.]( **DISCLAIMER: Please note, this offer is limited to the first 1,000 that take advantage today** [LEARN MORE]( “Cathie 2.0” Gives Innovation a New Name My trusty market hype-o-meter is flashing a red alert as growth-stock pushers return to pump their favorite holdings. Just last week, Morgan Stanley’s Sherry Paul put on a PR clinic during a CNBC appearance where she attempted to describe growth investing criteria by referencing the “price-to-innovation” ratio. No such metric exists, of course – a fact that Paul clarified as she continued to spout her investing wisdom. Still, all this innovation speak gives me 2020 flashbacks. After all, these buzz-metrics were pioneered by the famous Cathie Wood. It’s all part of the playbook! Just rattle off some outrageous price targets and you create a powerful FOMO factory to help your funds vacuum up more Main Street money. As you might expect, Paul’s “price-to-innovation” brouhaha elicited plenty of groans on social media. But I’m more interested in the timing. Remember, growth stocks are struggling this year. Many of these names attempted to break out of big bases during the fourth quarter melt-up rally. Yet many of these moves didn’t stick… Could these false breakouts lead to more chop and/or downside action in the weeks and months ahead? It’s possible – despite whatever “price-to-innovation” metrics they’re concocting out there… The Return of Davey Day Trader Not to be outdone, Barstool Sports founder Dave Portnoy is back in action as “Davey Day Trader” on social media after scooping up shares of Spirit Airlines (SAVE) just before the stock took a 25% nosedive on news that the JetBlue merger plans were starting to crack. You might recall the rise of Davey Day Trader and his green hammer during the peak of the pandemic lockdowns. Portnoy was in the trenches every morning, going live on social media to sling message board stocks and tout his favorite holdings, always with the disclaimer that he’s a gambler – not an investor or advisor. Well, Portnoy is diving back into the markets headfirst with the same swagger, rebooting his Davey Day Trader sessions to stick it to the “suits” and the “shorts” as he chases one hot stock after another. Portnoy is incredibly entertaining – and probably much more calculated and strategic than he admits on his live shows. The fact that he perceives there’s a large audience hungry for meme stock content hints that we’re seeing some wide-eyed speculators return to the markets following a bear market hiatus. AMC and GameStop might be dead and buried, but it’s clear the speculative money is starting to churn now that the 2022 bear market is fading into the past. Again, timing is the issue here. If there’s one thing we know about the crowd, it’s that everyone always seems to get excited at the wrong moment. These same speculators were throwing in the towel and selling every stock in sight in late October. Now, they’re loading up on meme stocks and growth names following a historic melt-up rally. It’s the perfect time for the market to humble the herd. It’s starting to get weird out there. We need to keep our thinking caps strapped on tight! Stocks continue to chop along this week as we cruise into the heart of earnings season. Household names litter the list of companies reporting, with a significant chunk of the surging mega-caps announcing numbers ahead of the weekend. Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), and Meta (META) are just a few of the big boys attempting to wow investors. Then, there’s the Fed meeting minutes hitting the tape Wednesday afternoon. Plenty to distract investors heading into what could be a pivotal week as the calendar flips to February. Don’t get fooled by the hype… [TUNE IN TO TOP TRADES LIVE]( Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com [Claim a copy of the most dangerous book in America right now.]( This is the only book I’ve ever read that brings to life the horrifying fallout of a massive international currency war. A war that’s playing out as we speak. In fact, this book is so hair-raisingly accurate… I’m offering to send you a copy for free today as a way to help prepare you for what could happen next. But with only 500 copies in stock, once we are out, they could be gone for good. [Simply click here now]( and I’ll show you what to do. [LEARN MORE]( In Case You Missed It… When The Frog Pokes The Bear Sean Ring, Editor [Sean Ring] SEAN RING Hi Reader, No, this isn’t one of Aesop’s Fables. This article refers to a geopolitical game that could end disastrously for one of its players. Why are they playing the game at all? Oh, Champs-Elysses! Not since the days of Napoleon has France been a genuine world power. There are too many strikes. Too many holidays. Too many regulations. There, adultery isn’t a sin; it’s a sport. The French Revolution robbed France of its Catholicism and replaced it with a vacuous secularism that continues to fail. In fact, it’s failing for all the West, as most were stupid enough to adopt the French model. After all, Catholic historian Erik Ritter von Kuehnelt-Leddihn once wrote, “For the average person, all problems date to World War II; for the more informed, to World War I; for the genuine historian, to the French Revolution.” And that makes it easy for a potent religion like Islam to come in and rearrange the face of the place. Sure, France has world-class cuisine, fashion, and food. Its language is beautiful. But those external qualities no longer mask the internal struggle. What was left of France’s empire died in Niger. Yet, it keeps acting like it’s got much more power than it has. And that’s dangerous. Gone are the days when France can prance around the planet, doling out dictums to everyone else, especially Russia. You’d have thought France would have heeded history’s lesson when Napoleon and his Grand Armeé were sent packing from Russia’s western frontier. But Le Petit Roi - that’s what journalist Pepe Escobar calls President Macron - may still be too young to appreciate history. He still thinks he can restore France’s greatness, but that’s long gone. For the foreseeable future, France is merely an open-air museum. What was France’s indiscretion this time? It let a bunch of its Foreign Legionnaires go to Ukraine, where Russia wasted no time in eviscerating them. First, let’s make sure we know who the Legionnaires are, as the last time most of us saw one was Bugs Bunny as a “Foreign Legion Hare.” The French Foreign Legion The French Foreign Legion is a branch of the French Army that consists of foreign volunteers who serve under the French flag. Established in 1831, it allowed foreigners to join the French military and participate in France's colonial campaigns. The French Foreign Legion is known for its rigorous training, strong esprit de corps, and loyalty to France. It has a reputation for being a formidable and elite force that can operate in any environment and situation. The Legion accepts recruits worldwide if they meet the physical, mental, and legal requirements. The French Foreign Legion has a history of involvement in many wars and conflicts, such as the Crimean War, the World Wars, the Indochina War, the Algerian War, the Gulf War, and the War on Terror. Today, the Legion has about 8,000 soldiers and is often deployed to Africa, Asia, and the Middle East for peacekeeping, humanitarian, or combat missions. The French Foreign Legion has a distinctive uniform and insignia, such as the white kepi, the red and green epaulets, the blue sash, and the grenade emblem. The Legion also has its traditions, such as the marching song "Le Boudin," the celebration of Camerone Day every April 30th, and the patronage of Saint Anthony. The French Foreign Legion offers a unique opportunity for foreigners to serve France and earn French citizenship. Legionnaires sign a five-year contract and are given a new identity upon joining. They can apply for citizenship after a few years of service or immediately if wounded. And there’s the rub: about ten percent of the Legionnaires are Russian speakers, such as Russians, Ukrainians, and Belarussians. The French government gives them new identities and, if they’re good enough, new passports after roughly eight years. But the Russian government doesn’t consider them French and won’t call them “Jacques,” whatever shiny new passport they have. With that laid out, let’s get to the incident. Russia Bombs a Shelter Full of Legionnaires "On the evening of 16 January, the armed forces of the Russian Federation carried out a precision strike on a temporary deployment point of foreign militants in the city of Kharkiv, the core of which were French mercenaries," said the Russian defense ministry. Nice one. The Russians called them “mercenaries” and not “Legionnaires,” which gave France some breathing room and plausible deniability. Local officials in Kharkiv said two Russian missiles struck a residential area in the center of the city, injuring seventeen people, two of them seriously, and badly damaging buildings. Of course, France denied the whole thing. "France helps Ukraine with supplies of military material and military training, in full compliance with international law, in order to help Ukraine in its fight to defend its sovereignty, independence, and territorial integrity," said the French foreign ministry. "France has no mercenaries, neither in Ukraine nor elsewhere, unlike certain others," it added. Smart one, Froggie. They aren’t mercenaries, so you’re not lying. What was the real reason? According to [The Duran]( the French government sent French Foreign Legion soldiers, including intelligence officers, to Ukraine but continued to pay and coordinate them through French intelligence. They’re conducting special operations behind Russian lines, and that led to a Russian strike on the hotel where they were based. Naughty, naughty! Russia has been warning the West to stop sending drones and surveillance to Ukraine, and now they are actively targeting and hunting down foreign fighters, leading to a dangerous escalation with the West. Why is France Risking Confrontation With Russia? There are a few possible reasons. One is that France is trying to curry favor with America. For what reason, I have no idea. Another likely reason is that Europe has long opposed Russia's dominance in the energy and commodity markets, which has caused anxiety over its inability to control Russia's resources. Russia is tightening its control of the commodity trade, causing nervousness in Europe. There’s talk of potential retaliatory steps. But if the West does something stupid like confiscating Russia's frozen assets, Russia will seize Western assets in return. That could lead to Russian control of commodity markets and hinder European access. Finally, this may just be a power play. Macron's stern message to Russia is a response to the collapse of French influence in North Africa. Whatever it is, France is writing checks it can’t cash. The Russians would eat them alive. Wrap Up France needs to cool it, Monsieur Le President, most of all. Yes, he’s a WEF tool and protege of the Rothschilds. But if he pursues this course, Russia will backhand France in the mouth, escalating a conflict that should be much closer to its end than its beginning. That may be what frightens Macron’s masters most of all. All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com X (formerly Twitter): [@seaniechaos]( Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Greg Guenthner] [Greg Guenthner, CMT,]( is chief strategist at Forge Research Group. He has spent the better part of the past two decades developing long-term and short-term strategies with a single goal in mind: to help everyday investors generate outstanding returns and control their financial futures. Greg’s charts, analysis, and insights have appeared in Marketwatch, Forbes, Yahoo Finance, and many other financial publications. 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