Well, well, well… it would seem the Grinch is about to steal Easter away from the stock market boys and girls this season. We’ve run our crash comparison graphs comparing the current stock market decline to the 2000 and 2007 crashes and things seem to be moving along as expected. Let’s take a look at SPY:
SPY is down 20 percent from the peak and we expect it has at least another 20 percent to go if not more. Let’s take a look at QQQ.
QQQ is down almost 30 percent and we expect another 30 percent decline over the next year but the collapse in SIVB may accelerate the Q’s as this was the primary banking vehicle for Silicon startups.
Lastly, XHB has been resistant to collapse contagion but with banks becoming capital constrained as counter party risk increases, depositors seek better returns or safer haven in T-bills, the commercial and residential real estate markets will become more capital starved over the next few months bringing down the XHB ETF. As a reminder and disclosure, we hold XHB PUT options for January 2024 expiry at the $55 strike price.
The Fed is also expected to raise rates again in two weeks which will likely taunt the markets but we’ll need to wait and see so stay tuned, stay profitable and stay solvent…