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03.15.24 Weekly Market Review: A Weather Change

For those of my readers not familiar with this time of year in Florida, it is not only spring break where traffic becomes an infernal hell, but also when the annual hurricane forecasts start to get published. In fact, I dug up an old photo (above) from 2008 about the “eye of the storm” to illustrate where our nation is now, as then, as far as the markets and economy pertains to this bizarre reality we are in.

Hurray, uh, sort of.

Needless to say, we can not build underground bunkers, but if we could this author would based on the early forecasts from some of my favorite meteorologists.

Is this weather change that is upcoming indicative of bigger problems? Probably.

Much like the weather change from winter to spring and the violence which sometimes is felt by the markets. Especially after a mild winter with an overly ebullient market period of speculation, AInsanity, and stupidity based on political and media propaganda.

This was a key day in the markets with option expiration and quad-witching which increases market instability in both up and downdraft days. The markets this week and today were no exception. Before we begin however, let’s review the terminology for any new readers.

If one is unfamiliar with the “quad witching” day, here is the official definition from Investopedia:

Triple- and quadruple-witching days occur when three or four of the following expire: stock index futures, stock index options, single-stock options, and options on stock index futures. Triple witching happens four times per year, but quadruple witching is rare. The concentration of expiring contracts on these dates can catalyze higher market volatility and heavy trading volumes.

Today, needless to say, was another eye opener. Ignore the price action and check out the volume levels (via the Wall Street Journal Market Data page):

Massive volume, mixed results for up/down volume and issues. Add in a bizarre twist of downgrades, warnings, and hints of management incompetence at some of America’s largest, most valued companies and it truly made for a day to behold; potentially historically as a marker.

The NYSE, one of the broadest indexes finished on a daily basis with a somewhat auspicious pattern at the close:

Not good, not terrible, but potentially a short term game changer. A decline to the 21 then 50 DMA is not out of the question here.

The weekly chart however is somewhat more ominous:

In “technical” parlance, that could easily be read as a shooting star, and if so a major downtrend could emerge in the weeks ahead.

The NASDAQ Composite is not too terribly different either:

A break below the 50 day moving average (DMA) means that 13,000 is easily open and a normal 20% correction is probably in the cards.

Why is this “convenient” for the bulls?

A 20% correction before Memorial Day, remember “sell in May and go away,” along with the layoffs and credit availability contraction (as predicted by these pages), would provide the cover for the Federal Reserve to initiate one more speculative frenzy into the election period and allow insiders to liquidate their dogs before a real bear market and potential stagflationary recession takes hold.

Stay nimble, know what limits of risk one can undertake, and enjoy the show.

The next ten months will be of such historical importance, both in markets, politically, and internationally, that few will understand the long term implications.

Profit from it now, while one can.

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