For all you cowboys out there, the title brings back memories, but I'm for the Forty-Niners! The season starts tomorrow. Enjoy.
Anyway, I was referring to the stock market. A few weeks back, we, at Evolution mentioned that the market is showing a picture within a picture. By that, we mean that the charts on the Dow, Transports and S&P 500 are displaying two ranges within a large consolidation pattern. It continues.
If you are a Bull, you might worry, but I woud not, at least in the short-term. The market has declined to a point where it will run out of gas or sellers for that matter. The Dow is at the bottom of its first range and in the middle of its lower range. The Transports are also at the bottom of its first range and the top of its second. However, it has a bearish engulfing at the end of last Friday. This indicates more downward pressure. The S&P is 300 points away from its bottom. We feel the Bears will get tired. There will not be anymore sellers. The market should bounce. We need to see if this bounce is a lower bounce than the last confluential point.
With that said, we also must look at the calendar. The Fed's meeting is coming up and September is generally a down month for the market. If I was a Bull, I would be very cautious. The signs of recession are not apparent as the market is not rational. How do you explain Micro Strategy (MSTR)? The market valued the firm at $525 a share in April and now, $218 and falling...hard. It is losing money like many other meme songs. Traditional things, things that you and I need every day, are in the dumps. We stated in last weeks piece, our continuing belief that we are already in a "stealth recession." We saw a suttle sign in the jobs report. How can you add 315,000 new jobs and then say, unemployment rose to 3.7%? We say because with higher interest rates, the zombie companies can no longer rollover their debt to keep being a going concern They are filing for bankruptcy. Here is our first short list. It shows what we see. The stealth recession is becoming more visual.
Revlon, the space firm, Masten, Endo Pharmaceutical, Express Jet, Bed, Bath and Beyond,
the imaging medical firm, Carestream Health, Regal Cinema, part of Cineworld.
There are also sections of larger conglomerates like J&J, and 77 mortgage lending companies. So, it begins and soon, it will become apparent. Peace.
