Well now that was no way to get ready for the holidays.
The markets took a direct hit.
This happened even with market bellwether Nvidia reporting far better than expected earnings.
I have had numerous friends contact me as to my thoughts.
I am like Charlie Brown saying “goog d grief” after Lucy jerked the football away before kicking it and ending up on his back.
There are actually two explanations that encompass the pullback.
The first is profit taking.
We were just at market highs with the S&P 500 up 16% for the year.
Then you pile on margin calls when the market turns south and it feeds on itself.
We experienced similar situations in the past, where once the market started down there was very little to stop it.
That is why market breakers were installed to stop the runaway train amongst other measures.
The impact of leveraged or margin driven markets is seriously on display with crypto.
A significant portion of the investment in this sector is younger.
They have seen little but higher prices.
Many, if not most, have leveraged their investment driving the return higher.
The problem is analogous to rolling over your bets on the craos table.
Not taking money off can result in losing.
When you are leveraged and the price drops enough the brokerage can issue a margin call for more money.
This hasn’t happened that often in the crypto market and many are getting sold out of their positions.
With this all being said, you have to acknowledge that the third quarter earnings reports were very profitable.
The latest labor reports were better than expected and inflation is not running up.
One would then be confused as to recent events.
Never lose sight that fear and greed drive markets.
That is why there are technical indicators.
These measure market psychology more than fundamentals.
I will stick with earnings every time.
This economy is not suffering.
For all the talk about a K economy with the rich ding well and the rest poorly, I point to the great earnings report from Walmart.
Don’t tell me rich people are shopping at Wally World.
I will just suggest you enjoy your holiday season and let the analyst fret about what the Fed will do in early December with interest rates.
I am headed to the mountains for a little work and a lot of relaxation.
