With February ending next Tuesday we thought we’d check in with the crash comparison charts for SPY, QQQ, and XHB. First up is SPY which seems to be a blend of the housing crash and the dot com crash.
Next up the QQQs:
The QQQs seems to be holding their ground however the tech sector has been announcing layoff after layoff the past few months and Intel just slashed their dividend this week. Microsoft and others have warned of tough quarters coming up. In prior crashes, the QQQs took a sudden and steep drop while so far we’ve seen a moderate graduate decline down. Will a steep drop happen in 2023? Stay tuned.
And finally, XHB:
The latest core inflation reading came out higher than expected giving the Fed more ammo to continue to hike interest rates and possibly do a 50 basis point hike at the next meeting in March or later. Mortgage rates are approaching 7 percent and the 10 year treasury bond is nearing 4 percent.
Our thesis remains that we should see continued deterioration in these indexes and as a a reminder, we hold short positions on XHB at the $55 strike level. We expect XHB to drop below $55 by January 2024 and the most recent earning report from Home Depot gives us hope that we’re on the right track. It won’t help Home Depot that it plans on spending $1 billion on wage increases this year either.
Stay tuned, stay profitable, and stay solvent…