A fundamentally different world has emerged in recent years; or at least it sometimes feels that way. Some of it seems 'for the better'; some 'for worse'; and some has mixed reactions even within similar interest groups. Everyone knows the issues. It's hard to say 'change' jeopardizes our future to the extent the super-bears think (who always call for catastrophe or collapse; so sure of course they get more press on the rare times things actually melt down..often a good indication the market's about finished with the corrective behavior).

Flexibility remains an analytical key; while recognizing the underlying 'tone' of sectors within asset classes. Hence our warnings last year about distribution under-cover of a strong S&P and NDX/QQQ last year; amidst historically-high insider selling, which the financial press largely ignored; preferring to focus on the S&P alone. Now they missed a commodity peak (short-term at minimum), and probably the Oil blow-off while Wall Street called for absurd higher levels and S&P probed the downside measures we previously outlined. All that sure set-up the projected rebound at the end of Quarterly Expiration and beyond.

I'd say the past year was a good lesson; for those who didn't similarly notice a panic (mass-crowd psychology) climbing into Bitcoin or crypto; setting-up the crash we looked for; or for that matter real estate in the 2004-2006 time-frame which (for some of us) was a good time to cut back holdings and buy back a few years later during bargain day. And even selling excess in the last 2 years unless you were moving and needed to lock-in a low-interest-rate mortgage.

More recently again there was warning of a mass psychosis in property; but at least lenders were more scrupulous with vetting; so you don't have such tricky negative-amortization loans and low-qualification entry of those heady days. (I noted at the time the fractional loan-portfolio CMO structure allowed some big lenders to peddle paper without the investors in the mortgages realizing what they were actually lending on, that had no value like was being represented.)

I suspect in a sense overpriced value remains true for high-price buyers of the last two years also; but at least loans are generally 'conventional', at very low interest rates. Also I believe the vast majority of homeowners are not merely 'renters with debt' as I characterized the situation in 2005-'06; because they mostly care about 'costs' per month now; and that almost always is lower with a mortgage or re-fi of the last couple years, than any decent rental. So today it's mostly renters stuck; and in a sense after rental inventory catches-up with demand; those investors in new apartment (or single-family) rental properties are going to be at-risk; if they're thinking the cash-on-cash returns promised by the promoters make sense. No wonder Starwood (a tad late) now agrees, and is contemplating selling thousands of properties they have investors in.. (in most cases, unless paying cash, not just mortgages, but property taxes, are not at preferred rates or exempt from increase aside 'primary residences').

In that regard I looked at the sq. ft. cost of new condos in Miami; and there's no way those will sell (or rent) anywhere near what developers contend. I note 'or rent' because some of those condos likely get converted to rentals during the preliminary (for now) shakeout in South Florida, for some cash flow if the downtown area itself is still afloat (we hope that's not just literally; 'la deluge'). It's hurricane season of course; so just given heavy rains already ... it's hinting.

So near-term we had liquidity being sucked-out and then thrust in (alternating moves) about as outlined; and this continues. It continues not just because of talk of peace, or of Oil easing (which it isn't at the moment); or fading inflation (though that's most important). Rather it bumps-into Quarterly re-balancing in a way that was suspected to evolve or persist into early-mid July.  It might even last beyond July 6th if the backdrop permits.

Speaking of 'la deluge'; we've already had that in the stock market for a year. It is the mega-caps ('advertised leaders of the S&P') or Generals that plunged this year, while the rest eroded somewhat. Is this a bottoming process? Wants to be, that's pretty clear. And talk of a 'ceasefire deal' in Ukraine and tapered inflation certain helps. The drops in domestic commodities (I mentioned paper and lumber and so on for a couple months) presage declines elsewhere; with the most important being the idea that Oil was topping as Wall Street issued a few absurdly high projections (like 185/200 a bbl). I suggest 80's not 180's..

Back to the market; you had breakaway S&P moves down earlier this month, and as I noted at the time, that's an ideal way to conclude a washout decline. I observed then and repeat now; that given a year-long preceding distribution of small stocks, there was no way to get a broad-based 'woosh' some still say lacking. Of course it's lacking; smaller stocks were .. . well-wooshed last year.

Bottom line: stability should prevail; with some infighting or jockeying around S&P resistance which is immediately overhead; as we enter re-balancing.