Things are getting interesting now and it looks like the index crashes are following the dot com crash but across the board instead of just tech stocks. Let’ take a look. First up SPY:
SPY is following the dot com crash pattern fairly consistently which means it will be a slow burn down the way a candle burn slowly over the course of an evening. The Federal Reserve is set to meet next week so we may have more turmoil in the markets.
Let’s take a look at QQQ:
QQQs have dropped 24 percent from their 2021 recent peaks and we think they have at least another 20 to 30 percent to go or perhaps more. As in SPY, the QQQ’s are following the dot com slow burn down process.
Let’s take a look at XHB:
XHB (Homebuilders ETF) is down 22.43 percent from 2021 highs and we think it has 40 percent or more to drop and we could be at the precipice of a huge drop. The banks are currently capital impaired with depositors fleeing to Treasury bonds and we expect credit to get tight over the next three quarters which won’t bode well for residential. Add to it the Fed hiking rates even higher and that’s a recipe for a housing disaster in this current enviornment.
We are 221 trading trades (308 calendar days) from January 19, 2024 where we hold PUT options on XHB at $55 strike price. We have been accumulating a position here during every rally and we hope to cash in at some point between now and expiry so stay tuned, stay profitable and stay solvent…