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Investors have pushed stocks into the death zone


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#1 skott

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Posted 23 February 2023 - 02:51 PM

"Either by choice or out of necessity investors have followed stock prices to dizzying heights once again as liquidity (bottled oxygen) allows them to climb into a region where they know they shouldn’t go and cannot live very long," says [Morgan Stanley strategist Mike] Wilson.
"They climb in pursuit of the ultimate topping out of greed, assuming they will be able to descend without catastrophic consequences.
But the oxygen eventually runs out and those who ignore the risks get hurt."
--Mike Wilson as quoted by Steve Goldstein, "Investors Have Pushed Stocks into the Death Zone, Warns Morgan Stanley’s Mike Wilson", MarketWatch.com, February 21, 2023. 

 

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#2 skott

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Posted 23 February 2023 - 02:53 PM

if you have a marketwatch account or do a trial you can read the whole article. I think it's $2/month to read these articles



#3 skott

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Posted 23 February 2023 - 03:45 PM

The author expects expects the S&P 500 to drop close to three thousand in 2023



#4 redfoliage2

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Posted 23 February 2023 - 04:10 PM

Not "investors", just gamblers betting/fighting against the Fed .............................


Edited by redfoliage2, 23 February 2023 - 04:13 PM.


#5 skott

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Posted 23 February 2023 - 04:36 PM

Not "investors", just gamblers betting/fighting against the Fed .............................

 

Yeah, I can see going into cash and receiving 4.5% or buy some short term treasuries but long at this point? you could only do that based on some kind of technical or momentum view. The money coming into high grade corp bonds has been crazy this year so far. I'll post that if I can



#6 skott

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Posted 23 February 2023 - 06:15 PM

The gist of the negative sentiment coming from an analytics team at Morgan Stanley, led by Michael Wilson, is this according to the Bloomberg article:

“While recent data suggest the economy might be able to dodge a recession, they’ve also taken the possibility of a Federal Reserve pivot off the table, according to a team led by Michael Wilson. That doesn’t bode well for stocks as the sharp rally this year has left them the most expensive since 2007 by the measure of equity risk premium, which has entered a level known as the ‘death zone,’ the strategist said.”


Edited by skott, 23 February 2023 - 06:16 PM.


#7 MikeyG

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Posted 23 February 2023 - 09:14 PM

I dont have access to the article, but it seems like he is shorter term instrument for his analysis. IMO, the 10 year yield is better instrument to use for risk premium analysis.

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#8 skott

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Posted 24 February 2023 - 12:06 PM

back in January with the breakout above the downtrend line of this bear market, everyone got excited and there were alot of calls for 4300 etc.

 

Look at the ES mini's the breakout has failed and not only broken back down below the downtrendline (false breakout) but it has also gone below the uptrend line from the October 13 low. everything still kinda hangs in the balance here at these levels but it's looking more bearish by the day. But hey, at least we have Brandon running sub 5 minute miles 



#9 skott

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Posted 24 February 2023 - 01:34 PM

the next battle if we hold current levels will be between 291-288 QQQ.  If that breaks, IMO, it's over ST and LT. Over time stocks are going much much lower. Not saying it's today or monday, day to day predictions don't matter although I think I'm  pretty good at that and I proved a day or two ago. The big money is made by being right and sitting tight. There has never been clearer data and signals that the market is set up for going down over time known as a BEAR Market.  My targets are QQQ below 100 probably before the end of next year. For now I say QQQ below 200 before July. Could come in March or April or wait till July  but that's my guess based on alot of things including the history of bear markets. Given the amount of brand new fools who came into the market with the free Fed money and made some easy money and now they will start losing it in earnest learning the buy the dip theory is not working any more they will dump it.  This is of course assuming we even have a country with a working infrastructure by 2024. Those who have read the Bible and the book of revelation and the current events that are happening have to be aware something big is going on. 


Edited by skott, 24 February 2023 - 01:34 PM.