Back at the end of 2018, I made an attempt to call a longer term bear market for big tech. Linked below are some of those posts. I was new to markets, and all I did was look at the chart. Even back then, the charts for Apple and Amazon looked ridiculous, but now it's undeniable that they've seen parabolic growth. This is the AMZN chart zoomed further in, where you can see how I was dead wrong at the end of 2018, as the money printer and QE kicked in again, taking the market to new highs shortly before the pandemic hit. Then, the pandemic hit and the Fed exhausted the last of its firepower. Will they save the market again? Above, I marked the 1600 and 1300 levels as areas of support, should the current level fail. Also shown on my Amazon chart is the long term uptrend, which has now been broken and confirmed as resistance. I expect markets to fall back to pre-stimulus levels, as the 2021 rally was largely "fake." Even though some of these companies may continue to remain profitable, I think some disappointing earnings will start to trickle in, signaling a depressing outlook for growth in the near future. Take Netflix, for example. It's already getting closer to testing some of those earlier levels. Perhaps it's a "canary in the coal mine" situation.
What's especially concerning is that even companies that have exceeded expectations (like Tesla) cannot sustain a rally. Look at that earnings pump and dump:
This implies that market participants are exiting regardless, and booking profits after many years of easy economic policy. Now here's something truly hilarious. Elon Musk and Bill Gates claim to be shorting each other's companies! What happens in this scenario? They both still profit. Billionaires are just playing games.
Here are some levels marked for Tesla. If Elon continues to innovate and do well, TSLA may not drop quite as much as some others, but that's still a lot of profit on the table. He's even sold some of his own shares himself: And Microsoft:
Why Would the Fed Just Let It Happen?
The easiest way to fix inflation is perhaps to just simply let things unwind. As big corporations lose profits, smaller businesses close, and people lose their jobs, their homes...a big financial crunch occurs that shocks the living daylights out of our systems. New solutions will need to be found, some of which may seem obvious, such as taxing the wealthy and corporations much more heavily. Some we haven't even dreamt of yet. Here's a speculation: Community living becomes more desirable, and new small businesses will need to emerge to tailer to those communities. A world owned by corporations already causes pressure on communities and small businesses, where your boss is forced into implementing oppressive working conditions to stay afloat. All the while, your next door neighbor begins trading Dogecoin and digital images to finally have a glimpse at paying off his debt or buying a home. It's an escape into a black void that consumes your soul, and the soul of society.
Ready for the collapse?
Let's see what happens.
This is meant for speculation and entertainment only.
-Victor Cobra
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What just happened with Google is exactly what I'm talking about. Big tech starting to miss those earnings.
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A huge miss in US gdp growth, now negative.
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Disappointing earnings from Amazon. Who saw that one coming?
yup its starting to look like everything is breaking down out of its moonshot parabolas. one big tech company at a time is getting massively deflated; see fb first then netflix. which ones next? big money is sneaking out the back door. the party music may have just stopped.
Gringo1nlx
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One thing I am not so sure on in this idea. The timing. This ground breaking earth shattering events typically occur at once, the big boys in these cases know whats happening in advance and crashes thatbyou suggest are about happen typically occur out of the blue, here it seems the whole world is on a cautiously bearish side already and frankly inthink retailers are gonna burn themselves by selling here before another explosive rally and then just then it might be the end of times that should occur. Timing these things is always hard and whenever u do it its probably not the time TO do it. Ive been checking data of money spent on equities comparing 2020-now and dot com bubble. We are nowhere near those highs.
Nevertheless i do agree with inevitable outcome of this idea. Good job.
Gringo1nlx
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@Gringo1nlx, im sorry, not money spent. But money supply divided by price in equities. There is an interesting observation. Spx and tech stocks were alot more stretched in the dot com era divided by money supply compared to today. In fact if you do divide both today in the spx, what you notice is that we've barely made past the highs in 2019, pre-pandemic era. That only tells me that things can escalate alot further to the upside before any major devastating crash. I think theres alot od money laying around about to enter and we are yet to see the magnitude of that in my opinion. Ofcourse short term long squeeze could happen wherever OI is high and people overexposed but i think that does initiate more upside. And only after that a major crash.
VictorCobra
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@Gringo1nlx, Thanks for sharing! I’ve also noticed this and wrote about it last year. I was thinking it could reach those highs but I think the pressures on the system are a little too high at the moment. Seems better to just wait to buy anything until it gets back to those lower levels. I think one of the few catalysis that could get us there is Biden cancelling student loan debt, which could have a momentary blowoff effect on the market. Here’s the write up I made last year:
Gringo1nlx
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@VictorCobra, that is exactly correct, now if you do the exact same thing, we are still hovering around same zone, maybe slightly above. Ofcourse it totally depends on monetary policy fed decides to take further on. Thank you for sharing as well.