The Market is Telling Us It’s Very Sick… Is Another Puke Coming?

Let’s cut through the BS here.

Unsplash

You cannot predict the future. No one can. Not me. Not Warren Buffett. No one.

We cannot predict if omicron will prove to be a devastating mutation of the virus. Similarly, we cannot predict if world leaders will shut-down the economy again, regardless of the “science” behind that policy.

We also cannot predict if this hiccup will force the Fed to abandon its tightening policy. Nor can we predict what the impact will be on growth. Even if there are NOT shutdowns, we have no idea how another mutation will impact human behavior as far as spending, demand, and the like.

So what can we do?

Focus on price and let the market show us.

Yesterday’s price action was awful. You’d think after a dump like Friday’s we’d get a major bounce. NOPE. Stocks didn’t even “close the gap” created by that drop (SPX, SPY).

Moreover, high yield credit, which leads stocks, hasn’t recovered much if at all. If anything, it’s telling us that stocks are due for another bloodbath shortly.

As I said yesterday, I didn’t trust yesterday’s bounce…at all. Another puke is coming. And this time around, smart investors will be using it to get rich, instead of getting taken to the cleaners.