not a single person is pounding the table

Only 16% of Nasdaq stocks are trading above their
200-day MA. Getting close to levels of prior market
bottoms (2002, 2009, 2018, 2020). Still won’t call it,
but if you like watching these indicators, here we are



Very rarely, once every couple of years or so, I find it necessary to write an extra issue of TDD because, well, things are moving fast.
So let’s talk about sentiment. This morning I said that we needed to see some contrition out of Cathie Wood before we made a tradable bottom. Boy, did we ever get it. She sold TSLA and bought GM, for starters. Then, later in the day, she said she was worried that we were going into a global recession.
Ding ding ding
Folks, if you don’t have conviction, you can borrow some of mine. This is the stuff that bottoms are made of. When the biggest bull capitulates, well, there you go.
And literally as I was writing that last paragraph, I got a sack dance email from a former subscriber who is really a horrible human being sack dancing over the tech names that I have held on the way down. Literally as I was writing the last paragraph. There are no such thing as coincidences.
Now, the reason I am writing this tonight because I want to talk about tomorrow morning with the CPI print. It goes without saying that there are a lot of shorts. If CPI comes in lower, holy cats is there going to be a rally. But here is the thing: if CPI comes in higher, there is also going to be a rally. In the old days, we used to call this the Costanza. Everyone who has sold or shorted has already done so, and they will be forced to cover.
It doesn’t matter what happens with CPI tomorrow—the market will rally.
Ok, I suppose if CPI prints 10% there might be trouble, but outside of that, this is one of the most asymmetric opportunities I have ever seen. If I were still on the ETF desk at Lehman Brothers, I would be quietly scooping up futures before the print.
So then the bounce begins. How high does it go? Well, we should really talk about that later, but one thing I will say about short-term trades is that they oftentimes turn into long-term trades. This happened during the pandemic. The market bounced about five percent, everyone thought it was over, and went back in to short again. And it went higher, and higher, for a year and a half.
It’s a bit too early to call, but this really might be the end of the selloff. I think there is a good chance.
No good trader goes all in on one single moment, and it probably makes sense to spread things out over a couple of days or weeks. But I have a sense we will be higher a couple of months from now.
I say all this at great reputational risk. Newsletter writers don’t usually stake their reputation on a single call. And I’m trying not to do that here. The last time I saw a setup like this was in March of 2008 when Bear Stearns collapsed. The market rallied 17% over the next three months, and cleaned out all the shorts before the real fun began.
Which means that, sure, we might have another leg lower in the bear market. Could happen. But the selling is probably done for now. That’s my shot, I just took it.


Cathie Wood… She sold TSLA and bought GM… This is the stuff that bottoms are made of. When the biggest bull capitulates

Isn’t capitulation when one does not switch horses any more but indiscriminately sells the whole stable?


I liked this post. Especially the last part about Bear Stearns. Bear came to mind with me yesterday as everyone was trying to explain what went wrong with Upstart.
Upstart was guilty of not disclosing all the loan balances they were holding. The ceo was on cnbc last night and didn’t want to acknowledge any wrong doing in holding that balance in loans. Similar to what Bear did in 2008. They were buying MBS debt while all the other firms were dumping MBS. They refused to think that they could be mistaken. Jimmy Caine (Bear)and Dave Girouard (Upstart), refused to think they could be wrong. The shareholders are left to suffer their losses, or maybe greed.
History does repeat itself.

AI Tech which upstart claims is the future, maybe true. But upstart was valued on their innovation and tech. It couldn’t handle a real world squeeze. Every financial firm is using AI. They don’t have a lock on the technology. Upstart didn’t want to be a bank. But they acted like one and lost.



Only 16% of Nasdaq stocks are trading above their
200-day MA…

Interesting to see the new valuation levels of cloud software companies, having fallen about 70% in the current slide.
Now they’re merely 50% more expensive on price/sales than they were five years ago!

I have no horse in that race.
But I always try to remain aware of the adage: never mistake the cycle for the trend.



Hi Jim,

Yes, it is interesting to see P/S coming down for SAAS. I wonder if this is an opportunity to buy or exit, assuming we are in a secular bear?

I have couple of SAAS stocks. Would be interested to hear your view on further contraction in P/S ratios for the SAAS stocks?

Now they’re merely 50% more expensive on price/sales than they were five years ago!

CAPE is making a return!