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Monday, August 8, 2022

Indiscriminate selling – The Reformed Broker

There are a few green stocks in the market today, and by “a few”, I mean you can count them on two hands and still have a few fingers left over. To gag yourself with. Those green stocks are things like Kohl’s (a special situation takeover story) and then it’s like grocery stores and shoe cobblers. That’s really it. Tesla is being absolutely mangled, which tells you which type of mutual funds and ETFs are being redeemed (liquidated?) today.

I have some buy limit orders in at completely outrageous prices, as per my post this weekend (The Rules). In my personal accounts, I’m bidding for Moderna, Netflix and Disney at lower levels – and if the selling pressure continues, I may get one or two of them.

This week we’ll hear from the Federal Reserve and get earnings from Microsoft and Apple. It’s a big moment. The reaction (or lack of reaction) to these events will be telling.

Today feels like capitulation in a lot of areas. There are some folks who want to sell and some who have to sell. You can’t discern the difference by watching the action in any particular stock. Red is red, doesn’t matter why. But one thing you know for sure is that the speed of these corrections has become breathtaking. Like nothing you’ve ever seen before. In the Slack channel Ben is saying it’s “instant repricing” which I think is a great way of phrasing it.

The action in Tesla (and its most bullish shareholder’s ETF) is looking particularly puke-y today…

The thumbs are flying furiously across Robinhood screens on millions of phones right about now…

Ironically, this all started over concerns about inflation, the Fed moving quickly and bond yields ripping higher. But bonds will always catch a bid eventually when the stock market acts savagely enough. And that’s exactly what happened Friday morning. Bond prices are higher again today, with yields lower, as money looks for safety somewhere, anywhere. See the opening gaps on the most popular Treasury bond ETFs below:

Read The Rules for surviving this thing if you haven’t already.

 

 

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