On Tuesday the stock market took a hit. I’m still hopeful that we can see a bounce as earnings season picks up, but yesterday Goldman Sachs fell hard after it reported earnings.
Some people think of Goldman Sachs as one of the rulers of Wall Street, with agents all in the government. Trump’s Treasury Secretary was a Goldman man and many Goldman people were also in the Obama administration and have come back into the Biden Presidency. Well, if some company’s stock this powerful falls like this in a day to create a tear drop stock pattern that’s not a good sign for the overall stock market going forward.
A “tear drop” pattern occurs when the price of a stock or ETF gaps down way below support. This causes those in it to feel trapped. The traders hope for a bounce to get out, but they are hurt by all the former support that has turned into resistance. It typically creates a dead money situation for months on end and can mark the start of a large downtrend. When lots of stocks do this during earnings season you are in a bear market.
Also note that bonds are falling in value, they are leading the stock market down.
Take a look at the LQD ETF.
Bond funds trade opposite to bond yields. When yields go up bonds go down. LQD is the biggest corporate bond ETF. When it goes down in value it means that the debt issuance costs for corporations goes up.
The price of silver also rallied as bond yields ticked up again yesterday. Inflation is causing the price of bonds to fall and making a money rotation out of the most speculative stocks and assets, such as crypto, and into real things and sectors that benefit from inflation. It might be time for crypto players to become hard money silver stackers.
In fact, now may be the time to drain your money out of your Robinhood or crypto account and to use it to buy physical metals!
I’m not saying put 100% of your money into them, but I have an investment allocation in physical metals, because I think they are key hedges for times like this and are positioned to go up now for the next several years.
So making the call to get out of ARKK style fantasy stocks and crypto and into real assets is what I am trying to tell people now.
That is the message I tried to send to the Youtube world with this video, but how many will listen?
-Mike
