BRIEF COMMENT ON THE BROAD STOCK MARKET (2:30 pm EST)
Just so we don't lose sight of the forest for the trees, I would like to clear up any possible confusion from yesterday's blog on the broad stock market about covering our short positions in the NASDAQ (or S&P 500 and DOW) once we discern the start of a new medium-term cycle in any of these indices. Yes, the start of a new medium-term cycle would be at least short-term bullish, and we would see some rallying. But we need to remember that medium-term cycles operate WITHIN longer-term cycles, so even if we start new medium-term cycles, a longer-term cycle correction in equities may not be over yet, and the medium-term cycles could easily and quickly turn back down to make deeper lows.
We note that currently the NASDAQ has dropped nearly 20% from its all-time high, the DOW about 10%, and the S&P 500 around 12%. These are big corrections, but if we are still completing a 90 year cycle in equities, these indices could go a lot lower. The behavior of stock markets in January is often a bellwether for how the markets will perform for the rest of the year. January's performance has been dismal. This doesn't bode well for the rest of 2022.
Just so we don't lose sight of the forest for the trees, I would like to clear up any possible confusion from yesterday's blog on the broad stock market about covering our short positions in the NASDAQ (or S&P 500 and DOW) once we discern the start of a new medium-term cycle in any of these indices. Yes, the start of a new medium-term cycle would be at least short-term bullish, and we would see some rallying. But we need to remember that medium-term cycles operate WITHIN longer-term cycles, so even if we start new medium-term cycles, a longer-term cycle correction in equities may not be over yet, and the medium-term cycles could easily and quickly turn back down to make deeper lows.
We note that currently the NASDAQ has dropped nearly 20% from its all-time high, the DOW about 10%, and the S&P 500 around 12%. These are big corrections, but if we are still completing a 90 year cycle in equities, these indices could go a lot lower. The behavior of stock markets in January is often a bellwether for how the markets will perform for the rest of the year. January's performance has been dismal. This doesn't bode well for the rest of 2022.
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