March 6, 2024

We Have Exited All Long Positions in the Stock Indices

As I have documented for years, Wall Street's analysts and "strategists" are generally HORRIBLY WRONG about the markets year after year after year. As a normal example, their forecast going into 2023 had the S&P ending up 4.7% at 4031...only to see it actually close up almost 24% at 4769. And most recently, back in December, their average forecast for 2024 called for the S&P to end at 4858, or up approximately just 1.8%...Yet here we are just 2 months later, with the S&P already 368 points higher at 5120…or almost an 8% gain…and NOW all those well dressed, well spoken, too well PAID, intelligent sounding, but perennially backwards NON-experts, are “revising our forecast,” and NOW fairly jumping all over each other in a competition to see who can be the most bullish.

I do NOT think we are looking at the all time highs in stocks forever, nor do I think we are necessarily about to begin a bear market, but I do think we are already at, or very close to the point, where YOU DO NOT WANT TO BE BUYING EQUITIES…where you do not assume that dips in individual stocks, especially in the red hot AI sector, are “pullbacks” that represent buying opportunities.

I have repeatedly presented “DON’T buy stocks” headlines generated by Wall Street’s geniuses as one indicator that has kept me recommending the long side of stocks since October, 2022…And though I have no quantitative measure to judge this, having collected bullish and bearish headlines for decades (which I have often referenced here), my sense is,ALL OF THE BANK AND BROKERAGE HOUSE SHEEP HAVE, ALMOST OVERNIGHT, TOTALLY FLIPPED FROM BEARISH TO BULLISH, and they have done so, true to their 30 year form, AFTER the market has moved sharply higher and proven them just as dead wrong as they typically are…which, by my reckoning, NOW ARGUES FOR NOT BEING LONG STOCKS HERE.

Check out these headlines from just the last week or so, wherein virtually ALL of them NOW have a newly bullish view of stocks…

I’d almost say that there is kind of “buy anything related to AI” attitude right now…and on a related note, would offer that the latest blast higher in Crypto is indicative of exactly that perspective…

Make no mistake, AI is here and it IS big…but that does NOT mean you can, at just any time, go buy AI related stocks and “know” you’re going to make money. And right now, I believe, is NOT the time to be doing so.

 SOME LONG TERM CHARTS…

I've done enough charting to know that nothing about technical analysis presents any absolute answers as to what comes next...But I also know not to ignore truly big lines, and interestingly, all three of the major indices shown below are dead on the upper boundary of their uptrends going back over 20 years...By itself, this does not call for an automatic, "Sell," but when combined with my current perception that the majority of brilliant “strategists” in the brokerage business have very recently totally flipped from negative to overwhelmingly bullish, I THINK IT UPS THE ODDS THAT WE HAVE REACHED A TURNING POINT…and thererfore I NO LONGER RECOMMEND BEING LONG THESE THREE MAJOR STOCK INDICES. I am not ready to actually be short and I am NOT looking for some sort of major collapse, nor am I looking for the much ballyhooed Recession that analysts and economists wrongly predicted for the past few years. I SIMPLY THINK IT’S TIME FOR, AT LEAST, SOME DEGREE OF A RETRACEMENT (10-15%) IN STOCKS…during which I would be particularly skeptical of any Wall Street recommendations that allude to participating in the AI or Crypto related companies.   

When you get down to it, it seems that most of the hot NEW recommendations from Wall Street are related to Crypto, Chips and AI...and yeah, those companies, especially Nivida, have been flying, but to some extent, they are definitely reminding me more and more of "unstoppable" Telsa back in 2021-2022...which is now trading at 50% of its 2021 value...As I frequently point out, the "values" of all these pieces of paper are based more on media generated perceptions that influence the public and supposed “professionals” into chasing, and then fleeing, hot ideas, than anything else…that all of the myths  about PE's, forward earnings, market share, etc. determining what prices “should be” are just talking head bunk. IT'S ALL JUST PAPER...AND FOR THE 1000TH TIME, THE MARKETS ARE ALL JUST A GIANT MOB PSYCHOLOGY GAME...I mean…Think about it, that Telsa, which is no less of great company than it was 2 years ago, is now “worth” half of its former “value?”

My dumbass opinion one more time:  If you invest according to what Wall Street is saying, you are doomed to lose…And right now, after saying “DON’T Buy,” FOREVER, they are NOW all hopped up on doing exactly the opposite.

Since 1990 I have been writing that I viewed the planet as being in a multi-decade monster economic expansion driven by two major forces…One: The Technology Revolution, which 30 years later is still roaring in high gear, accelerating really, not slowing down….AND Two: The Triumph of Capitalism over Communism (economically), wherein, with the collapse of the Soviet Union, while at the same time, China was shifting to a state sponsored Capitalistic model, the world added several billion new potential entrepreneurs and CONSUMERS to the global economic equation. Since then, other major bullish factors have occasionally come into play (super low interest rates, or crashing energy prices), and while the march higher has certainly not been without contractions, the overall picture, as reflected in the charts above, has basically just been DECIDELY UP…which is why, just tracking back to the early 2000’s, I have recommended being long the stock indices in over 110 newsletters, while recommending being short less than 15---half of which came during the 2008 crash when I recommended being short at 13,000 on the Dow and stayed that way all the way down to 6500 almost a year later…all of which are still there in my newsletter archives on the website---My point is, it is RARE for me to be AT ALL negative about the stock market…And to be honest, since the 1982 lows, after hearing 1000’s of analysts opinions, for years on end, predicting “impending doom”, I tend to shy away from saying, “Hey. I’m the genius who’s picking the next top in stocks!”…BUT…One thing I always do here IS lay out it as I see it…And that IS the way it looks to me right now. Maybe what I’m sensing is just temporary and all we really need is some sideways action to dispel some of the wide-spread Wall Street bullishness that’s out there today…and I’ll be admitting I was wrong…but right now? I WOULD NOT BE A BUYER…OF ANY STOCK ALMOST…HOWEVER “CONVINCING” THE NEW YORK STORY MIGHT BE.

I would LOVE to hear what everybody thinks about this…Whether you want to do anything with it or not, please DO give me a call and tell me what YOU think.

Thanks,

Bill

770-425-7241

866-578-1001

All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics and CRB.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Stock Indices, Bonds