Yikes: Massive Flip Flop Coming to Stocks.

here's an article that basically just

feeds right into the beautiful

deliciousness that I'm looking for every

single day it just makes me tingle

inside because it makes my bullish bias

get so happy and it just makes me feel

so comfortable in my Christmas sweater

it's an article that's titled rare Buy

Signal hints that the worst is over for

stocks is this a piece

in Bloomberg that could potentially be

reiterating the Nike Swoosh may think so

based on the title but I haven't even

read the article yet I just saw the

title and I'm like we

so let's take a look

a purely price-based signal oh so it's

technical based okay a purely price

based signal suggests the bottom is in

for stocks despite several lingering

risks

this is by Simon white this is a hard

column to write oh is it deposit flight

poor liquidity weakening earnings a

credit crunch recession it would be much

easier to list reasons why equities

should be lower

but that doesn't necessarily mean it

will be as anyone who has spent enough

time in markets understands they have a

habit of being anti-utilitarian causing

the most people the most amount of pain

that's an interesting line actually

because utilitarianism is is making sure

you do the best for the most amount of

people right but stocks basically do the

opposite

it thus always pays to consider the

other side of the case but even with the

best will in the world it's hard to

fully let go of one's biases that's why

technical analysis can be so powerful

but in this case technical analysis is

bullish

some call it Voodoo but using Market

data to identify Trends is as old as

economics dating back from the 18th

century when Japanese rice Traders used

Candlestick patterns to predict price

movements recently one very technical

base Buy Signal called the kavuk has

triggered suggesting the long-term

outlook for U.S stocks is constructive

and the bottom is potentially already

in a rare but reliable Buy Signal for

stonks fascinating all right I'll pull

this up in a moment here all right what

does it say here the Kappa is at base a

momentum oscillator which triggers when

the medium and longer term measures of

momentum begin to turn up on a

persistent basis okay got it uh moving

average is essentially of momentum based

on adapted parameters it triggers only

rarely but the times it has triggered

were October 1982.

August 1988

April 2003 August

2009 and all of those were good buying

opportunities it outperforms the s p

average return

over a three month six month and six

month horizons with the greatest

absolute outperformance over 12 months

19.1 versus 9.7 percent

wow s p returns after that's the s p

returns after you you hit this okay so

here's a chart

of what this uh reliable Buy Signal

indicates and so here you can see 82

great Buy Signal 88 great Buy Signal

soft Buy Signal here in the early 90s

which was also correct

2003 April very correct and uh and and

uh 2009 notice this actually isn't at

the bottom like if I draw a little arrow

here uh that's not a little arrow but

whatever if I draw a big Arrow notice

that the bottom actually came before the

indicator triggered right so the the in

like the indicator actually triggers

once you pass a bottom

which makes sense because we we kind of

passed the bottom what

um you know December for some stock some

stocks was October some stocks was July

so you kind of passed that bottom okay

now let's look at the returns

oh that's quite interesting and see this

is why people like have it why would you

be in stocks treasuries are yielding

four percent and I'm like

that's nice you're getting four percent

I'm going for 20 for the year you know

some actively managed ETFs are already

up 25 year-to-date

we won't mention any names uh you

because you have to go look and you have

to net out fees and all this kind of

stuff and so that's why we just don't

mention any names around here uh but

there are many there are many different

ETFs that have done very well this year

car park

signal shows above average forward

returns s p returns after the car park

I never never thought I'd be so happy to

say cop pock

overall return period data back to 1979.

the three-month Kappa gave you a five

percent return on the s p 500. the six

month car park gave you a 10 12 month

gave you that 19-ish percent

uh compared to periods of time where you

did not have uh

indicator all right that's cool

the great appeal of technical signals is

their simplicity

uh this technical analysis uses only the

S P's closing price on a daily basis no

economic data no political interference

no opinion it's fixed and it's

unemotional this also signals this also

means signals such as the kawak can

trigger at very counter-intuitive times

a signature of contrarianism and a

Hallmark of many of the best spying

opportunities

don't tempt me

uh the car block is previously triggered

well before the FED has started to hike

again when the ism was under 50 and

while unemployment was Rising as the

signal is not trying to pick absolute

bottoms the s p is generally already off

its lows that's true we are we actually

that was one of the first things we saw

as it wasn't really aligning with

bottoms uh and and I I'll give a little

bit of a of a potential thesis on why

this is happening uh and then I want to

keep reading about this bro because

there's some other TA in this as well

but

uh uh car park thesis cop pick no that's

that's not what I wrote Apple stop it no

no I didn't write that word either no

okay there we go

all right oh geez oh God

there we go all right so why why would

it potentially be possible

that you could have this large downtrend

and maybe that Nike Swoosh we've been

talking about but why would that let's

call it that

what it is car park why would that

trigger here as a big buying opportunity

uh well aside from technicals what what

actual reasons could we potentially give

to this potentially triggering uh well

in my opinion we've got we have so much

bad news right we have so much bad news

but uh inflation is actually trending

down maybe not as exactly quickly uh as

people had hoped or wanted but the pain

is the pain

is not getting worse right uh and and

that's that's the one thing crushing the

economy right now

and so when we actually we look at

everything else is like a symptom of the

disease like let me try to put it this

way let's Okay this I I I hate making

this reference because it's so terrible

to people who have to go through this

and I wish this upon nobody and whoever

has this Affliction I wish you a fast

recovery but inflation is frankly like

cancer okay and uh your vomiting is like

the bank crisis your medicine is like

you know your your chemo uh is like

higher rates right uh your your hair

loss is like uh you know hair loss there

we go it's like earnings going away uh

your fatigue uh is like uh you know cash

going away right like cash savings going

away uh and um and and loss of appetite

you could call it right whatever okay so

a little morbid but I'm trying to make

this comparison here okay so so

everybody bearish

because of like people are looking at

the economy and people are like dude the

economy is vomiting it's losing its hair

and and it's losing weight like this is

a crap economy

but what if

you're able to look and say but dude

the cancer

is going away

well then if that's going away then

eventually all of those problems will go

away too so yeah there's a never-ending

list of crap you have to deal with when

you go through something as terrible as

this

but if the actual cancer is going away

inflation then eventually all the other

crap will go away that's sort of if I if

I had to give an explanation as to maybe

like on a non-technical basis why the

bottom may already be in it would be

that now I understand people are like

but

usually the stock market doesn't bottom

until you're actually in a recession

and a yield curve is re-steated

I know but the weird thing is

everyone knows that

and so the irony is when everybody knows

that stocks bottom when the recession

begins it's possible that the stock

market's like well if the cancer of

inflation is going away and the stock

market's going to bottom when the

re-inversion occurs let me get in before

the bottom

so that way I I can you know because

we're not going to be able to perfectly

time the bottom let's get in before so

we can get to get good deals before and

then ride the the recovery afterwards

right so it's possible that you sort of

have that pre-pricing in of what's to

come because that cancer inflation is

going away okay my thesis let's keep

going on this

similarly did I by the way mention that

if you could get if you wanted super

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sure you go to shortform.com uh that is

a paid promotion look I fixed the

phraseology up here let me fix the

spelling all right similarly today does

not appear here to be a good time to buy

with economic data weakening and credit

titing but if we were to listen to only

this signal it tells us to buy and close

your eyes another reliable signal the

zig thrust thrust has also recently

triggered the svig activates more often

and does have false positives compared

to the Kappa but it is a good

gauge of a medium turn trends of the

market is this like a Jason svig the

intelligent investor indicator probably

I like that guy that guy's cool uh what

is this breath Trust

the New York Stock Exchange Sleek thrust

with adapted parameters okay good Lord

that's got a lot of green signals uh but

anyway you can see it's activated over

here

uh it looks like over here you had a

little bit of pain after it activated

one said here you add some paid after it

activates so this one's not as reliable

I'd say it's reliable here here

over here here was great

this was too early so they're definitely

there are a few occasions where it's a

little too early here it was definitely

too early here's too early but it seems

like more often than not that's that's

probably at least somewhat correct okay

stand by let's see what else we have

here

okay

[Music]

okay cool

the signal goes off whenever breath

defined as the net number of socks

Rising on the New York Stock Exchange

rapidly goes from being weak uh very

weak to very strong thrusts higher oh I

love thrusting uh

thrusting it's fantastic

it shows good above average returns over

the next one three and six months

if technical signals strength

is their Simplicity it could also be

their weakness no Trader or investor

could ever take a decision based purely

on them unless part of a more

sophisticated Quant strategy ooh fancy

it would be tricky to say the least to

explain to your client that you were

long purely because of one moving

average well see that's always what I

think is so funny

is I actually think a lot of the

financial advising industry

uh is is uh is based on well how do I

explain this to my clients

seriously I think most of the most of

the stock market and financial advising

business is how do I explain what I did

to my clients and so in 2022 oh we are

going into Consumer Staples because

everybody's still gonna have to buy

toothpaste and then the clients are like

yeah yeah that makes sense

and then now it's 2023. gold is rising

and if we're going into a recession you

know historically gold goes up and

copper goes down

yeah yeah yeah yeah yeah yeah yeah yeah

that makes sense

and so you get this like all this

trading and rebalancing of your

portfolio and it's really moronic

because it just sets up a lot of

commissions uh in in the financial

advising space uh while at the same time

trying not to have clients flee right

because if you have like a diamond balls

approach and you're like just give me

pricing power stocks at good deals

people are gonna be like but

right now like you you're not you're not

protecting me you're the problem and

then they they go and then they go YOLO

into gold at the top of the market and

it falls and they YOLO and to Staples at

the top of the market and they're false

and then and then they come back to a

different financial advisor because it

wasn't you know whatever it the whole

business screwed this is why most people

lose money in it that's what I say like

the easiest way to build wealth is Real

Estate

because this business is rigged

but Kevin this sell of course on stocks

yeah

I do and guess what I tell you stuff

like that a lot more some really good

perspective in there okay what else we

have uh it pays to incorporate these

signals into your views in today's case

the message is that despite everything

pointing towards weaker stocks price

action is Whispering that it might be

run in other words stocks May or have

already bought them as already said this

was a hard column to write stocks could

very well go on to make new lows before

they exceed last year's high but great

buying opportunities only look

Elementary in retrospect and it would be

remiss not to point out that this may be

one of them oh oh oh tingle me on the

inside this may be one of the best

spying opportunities what they're saying

what

I like this column a lot this column

this column talked talked right to my

soft spot and she talked dirty to me

over here this was really cool all right