Don here...
Everyone is staring at the geopolitical headlines. They're missing what's actually breaking.
Microsoft is down 21% year to date. From its recent high, it's off more than 30%. That puts it in a full-blown bear market.
The S&P 500 is barely down 6% from the highs. Traders are panicking like the world is ending. The index isn't even in correction territory.
So where's the disconnect?
NVIDIA is holding the entire market together at $4.3 trillion. It's only down 5% on the year. As long as retail investors aren't redeeming their 401(k) funds, NVIDIA stays intact and the index masks the carnage underneath.
But that mask is slipping.
Google started breaking down in the last two sessions. The bond market has been collapsing, with the 10 year rate spiking from 4% to 4.4% before pulling back. High yield bonds are cracking for the first time in a long time.
The private credit space is where the real damage is piling up. Tonight's video walks through the entire wreckage:
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Deutsche Bank is down 24% year to date and showing signs of a long run to the downside
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Ares Management has been crushed 36% year to date from the private credit fallout
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KKR is down 30%, wiping out nearly three years of gains
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Blackstone is taking serious hits in private credit while owning half the residential real estate in the country
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BlackRock, the largest asset manager on the planet, is down 9% year to date and dragging entire sectors with it
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Regional banks via KRE are on the cusp of real sell side activity
The rallies keep failing. Monday failed. Tuesday printed a doji star and failed. Wednesday was tracking the same pattern with 30 minutes left in the session.
I also walk through the low hanging fruit I'm watching on the short side. Names like SAP, Salesforce, Lululemon, and Nike can't get off the mat even on green days. That tells you everything about where momentum is heading.
One more thing…
…The S&P 500 has gone 11 consecutive weeks without closing outside the expected move.
The remaining expected move into Friday is $100.
I would double that number.
Thursday and Friday are setting up for a massive move in one direction, and there is no in between.
Click here to watch me break down the private credit crisis, the names I'm targeting, and exactly what to expect into Friday's close
To your success,
Don Kaufman
Chief Market Strategist, TheoTRADE
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