Another lethargic week with almost all stocks down materially on growing investor pessimism. News continues to be negative: rising prices for fuel, food, utilities, and enlarging strike against auto makers.
What little interest investors had in stocks was snuffed out completely by the Fed’s comments that rates will certainly remain higher for longer, with no plans for any reduction in all of 2024.
That caused a sell-off in the mega-stocks, such that the indexes finally fell significantly – although the other “S&P495” stocks have already been in free-fall for weeks.
With yields on treasury bonds and notes now in the +5% range, and rates on CD’s in the +4% range, many retail investors who have historically been complacent to earn 8% in stocks are settling for these alternate returns because they don’t want the market risk. They have basically given up on stocks for the near future.
Our short positions continue to provide some gains, while longs continue to get clobbered (harming Level 1 performance the most).
With no buyers for stocks, and most stocks already at or near 52 week lows, there is little on the horizon to suggest stocks will move much in price either way. Very difficult conditions in which to profit, even for those of us who trade in both directions. The stock market is just not giving us much in return right now, much like in the first half of the year. Patience is key.
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