We ran an update on our crash analyzer and came up with the following updated crash comparison chart.
The chart lines are eerily similar and we think they are so because they reflect human behavior. There is a famous cheat sheet for stock trading called the “Wall Street Cheat Sheet” and the pattern is almost universally repetitive.
We are crossing from “anxiety” over to “denial” and if you look closely there is a sudden spike up right by the “denial” phase and we expect a bear rally now that the Fed has concluded the last hike.
The next FOMC meetings won’t be until November 2 and December 14 which leaves now thru all of October for the market to rally on brief bouts of good news. If the Fed continues to hike as expected then we will continue on down to Panic, Capitulation, and Anger.
In the meantime, our XHB put positions were briefly in the money as XHB dropped down to 55.45 today but we expect XHB to go down to the 30 range so we’ll hang on for the long haul.
We have also continued to buy US Treasurys that are now yielding 4% to wait out the stock market down turn.
Stay tuned and stay solvent…