Stock prices followed a pattern that has been recurring repeatedly of late – posting modest gains early week followed by an enormous sell-off on Friday.

Friday’s news this time was a double-whammy – the largest rise in inflation in more than 44 years, combined with the lowest consumer confidence reading since 1980.

Given consumers have always been the segment to lift markets out of recessions, this dismal reading suggests they are not about to turn optimistic soon, already suffering crushing inflation far above the “official” 8% year-over-year figure from Washington (the formula for which is rigged to undercount and is no more accurate than the stock market indexes – most necessities like food and utilities are running +30% greater than one year ago, and gasoline and mortgage rates have nearly doubled).

Short positions continue to provide our profits, while long positions sag further. Level 1 continues to significantly under-perform, having so few shorts.

Given summer months usually provide the fewest large stock price moves and reversals, there may not be much trading activity for us in general and little change to this downward trend for some time – many stocks are already at new yearly lows and have little room for further decline.

Near-term we may see some buying by institutional value investors at steeply discounted prices, although similar efforts in recent weeks have yet to prove profitable.


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