We’ve Bottomed or We Haven’t 🤷‍♀️

The Tale of the Tape

Sometimes, people have no idea what the hell they are talking about. 

You get an uptick in verbal tomfoolery when things seem uncertain or confusing or when volatility and anxiety increase.

People say paradoxical things like “we’ve bottomed here unless support fails in which case we may go much lower.”

Note the combination of waffling and certainty. It is exquisite.

We’re paraphrasing here, not naming any names, and not bringing this up to bust chops. We’re more focused on this simple truth people might keep in mind:

Nobody knows where the market is going and people talking out of both sides of their mouths are knaves.

Oh yeah, stocks gave it up again today after opening higher. Sound familiar? Weak sauce. The Russell lagged while Nasdaq managed a fractional gain.

Energy, the ugly stepchild of the stock market got smoked again, falling 3%. Energy ETF $XLE is now down 20% on the year… yikes.

S&P 5003,116-0.38%
Nasdaq8,980+0.17%
Russell 20001,552-1.22%
Dow Jones26,957-0.46%

$48/ Barrel 

Crude closed below $50 today. What a dog. The commodity isn’t totally breaking down, but it crossed one of those magical round numbers that everybody seems to pay attention to. 

Here’s the monthly chart to give you some perspective: 

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The Most Stable Store of Value in History  

There’s a notion among cryptocurrency investors that one of the many disruptive features of bitcoin is its properties as a digital store of value. 

A store of value might be thought of as an asset that does not depreciate or expire. Historically, gold, an inert metal, has been perceived as a store of value while something like milk would never be thought of that way.

On Hackermoon, Daniel Jeffries writes

“Bitcoin is the most stable store of value in history.”

During this recent 4 day sell-off and as the S&P 500 has fallen 8%, bitcoin has fallen 12%. Gold, for the record, is up 2%.

Brief time frame here, sure, but tough to say bitcoin is a store of value when it corrects when US stocks correct.   

Coronavirus Google Trends

Here is a Google Trends chart for interest in “coronavirus” since January 15. The peak was from the end of January, but you can see the recent up-tick from the news over the weekend and the first part of the week. Something to think about and keep an eye on.

Relative Strength in the 5G REITs

If you’re hunting for relative strength, check out the wireless/communications REITs. These stocks broke out earlier this month and have barely budged relative to the market during the most recent episode of “markets in turmoil”. Perhaps, the algos are waiting to sucker you in before hitting the exits, or this is a flight to strength. Take your pick.

Here’s the charts:

$SBAC – SBA Communications

$CCI – Crown Castle International

Earnings for Tomorrow:

Be sure to know when your stocks are reporting. Here’s the full earnings calendar.

Links that Don’t Suck

Morgan Housel’s new book, The Psychology of Money

5 Companies Make up 18% of the S&P 500. Should Investors Care?

US New Home Sales Surge to 12.5-year High in January

Square Earnings Top Expectations, Stock Pops On Updated 2020 Guidance

Are smart cities a dumb idea?