Your guide to Q2 USA stock market. April. Here we come…!!! via /r/wallstreetbets #stocks #wallstreetbets #investing


Your guide to Q2 USA stock market. April. Here we come…!!!

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:_(

Before we begin I would like that we all have a one-min of silence for the “Chicken genius” aka Keng Tang and his contribution to Wall Street, who worked day and night to help retail investors get an edge over the big institutions and hedge funds in the financial world.

Chicken Genius : July 2019 – March 2022

We all will surely miss him. It doesn’t matter, if he chickened out and sold everything in the market crash. What matters is he recovers from whatever emotions he might be going through now that the market has recovered. He should not have deserved this amount of hate from both retail and other financial youtubers.

At the end of the day, it’s you people making your own financial decision. So it’s your fault if you lose money while following someone’s advice. Just go follow someone who is correct 100% of the time. Oh wait, there isn’t one.

We people just sometimes take things too, far and over abuse the power of social media “Cancel culture”. What we don’t take into account is the fact that the other person is also a human being who might be going through some stuff that we dont know of. Hurting someone when the guy is down guys, we are better than this. Lets make sure we don’t lose any other financial youtubers.

In short, all I wanna say is : If you cant say something good, just don’t say it. And if you can, then go say it. It might make someone’s day good.

P.S. God if someone said in the comments section that he shouldn’t, read it. I will f-lose it.

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Respected Traders & Investors,

First of all, I would like to apologize that I didn’t do my HW on the top 10 pts we were going to discuss. I guess that makes me the laziest guy on Wall Street. This post i wrote was intended to be sent yesterday right before April 1 so that you wont take this as a joke, but ig sh9tpost like this are meant to be taken as a joke. Lol.

Regardles, i Hope you are all enjoying and loving this euphoric rally in the stock market. You “Cash HODlers” you just couldn’t stop yourself from investing after March 15 in Apple and Tesla as a place to hedge yourself against inflation, could you ? I admire your level of confidence in the stock market. You guys are absolutely killing it. For now.

Tesla Up : 44% from my Call

Apple up : 18% from my Call

But now the question in everyone’s mind remains ” Is this a bear market rally ” or are we finally “Out of the woods” now.

As my readers already know my stand that from march 16 fomc aftermath we predicted this exit liq rally which i said would last till q2/q3 imo. And Q4 22 – 2023 recession.

Note : Right now i see the daily stochastic of high growth and value stocks maxed out. So a slight sell-off of about 5-10% in April’s first week is coming. (Explanation is ahead)

Now that i have repeated my recession in Q4 2022 line a million times and made it clear come lets have a look at markets and understand some theories and news you need to keep in the back of your mind to help prepare yourself better for going into Q2.

April is the strongest month.

April has by far been the strongest month in the history of the stock market, even during the bear market.

Weakness at the start and end of month

Sell in May and go away

So here’s what I think could happen. A slight sell-off during the first week prior to the CPI release and then after the release we go up till the end of the month, and then you sell and prepare yourselves a nice holiday vacation in the Bahamas. Yes i am serious. You have to enjoy your time too, and refreshen your mind. Coz, that is what the big institutions and HFs around the globe do.

Note : if April becomes a disastrous month, it will be your warning signal that something worse is about to hit every stock market around the globe.

Chart : US10y-US02y, Blue line : Fed funds rate, Orange line : SPX

I know guys, it’s complicated with nothing written over it. Lemme explain and try to make it understandable.

From yr 1985-2022

Whenever the Federal Reserve decides to raise interest rates to combat inflation, they end up inverting the curve during the tightening cycle after 2 or 3 rate hikes. The gray vertical lines ( not the dotted lines ) are the period whenever the curve has been inverted. The only exception was 1995, when it didn’t cause the recession after gradual rate hikes. But it also didn’t cause these exceptionally dangerous log-down lines. The Wall Street and suits don’t tell you this. Only I do. So if the current graph in log causes these monstrous looking lines with U sign. It would mean you’re in a bubble and it’s about to burst in 6 to 24 months.

Also this time we are having an inverted curve only after the 1st quarter basis pt which suggests something dangerous is going on behind the scenes. That’s your job to figure out. I know it’s mine too, but I haven’t reached that conclusion yet.

Is it something related to dedollarization or the Soverign debt crisis about to happen because of money printing by every country in the world.

Note : 1st U : Crash of 1987 ( Reason : VIX and SKEW options ), 2nd U : Dotcom bubble of 2000 ( Reason : Crazy Tech valuations ), 3rd U : Housing crisis of 2008 ( Reason : Subprime mortgages ), 4th U : Covid crash ( Reason : Man ate a bat )

Oil Technicals

If you have ever thought that Federal Reserve manipulates bonds or some HFs and institutions control the price of stocks, well, the oil price currently is like next level open manipulation.

Seriously, Russia is holding their Oil reserves and putting pressure on the EU to buy Oil in Rubles. They are kinda taking supply out of the market. Hence increasing Oil price. That in turn is causing the USA stock market to have a fall.

So Putin = Put

Whereas the USA on the other hand, is releasing supply by the help of OPAC Oil barrels. Today they are going to release a record no of supply. Lets see how bad the oil prices drop. There is a technical level which can crash. oil prices. Lets see if Biden manages to do it and hence in turn would lead to the stock market to rally if it indeed happens.

So Biden = Buy.

a) Jobs & CPI { April ( far worse ), May ( less worse ), June idk }

Job reports and CPI releases imo, are seeing a lot of volatility in recent days. These events generally have a sharp pump starting just before the release of the report and then after 5mins when the report is out they dump and come back to those same levels that were yesterday. Crazy right.

J Powell

b) FOMC & Minutes

Minutes, as you all remember, was what caused the January crisis. The writing on that was far worse. Imo we wont see another worse minute like that coz FED has got only the two tools : Interest rates and Balance sheet. They pretty much used them in minutes. The secret Volcker weapon is to be used in FOMC, not minutes.

Talking about FOMC, Federal Reserve meeting as you all know, depends on a single man called Jerome Powell ( current status : Hawkish ) and whether he chose to come out as this puppet of Biden or not.

Here’s what we know so far :

( I will try to keep this as dumbed down as possible )

Inflation is high across the world. Why?

-> Due to QE being injected by every other central bank of the world and saving people from going into recession during the pandemic

( The result of money printing devalues currency, which in turn increases the price of assets you own, including stocks and other assets. This in turn creates a wealthy environment, which most likely leads to people spending more money on things when the lockdown gets over. Also, the lowcost borrowing environment helps businesses stay afloat and hence we also see a massive boom in IPOs and SPACs. Companies make tremendous profits in these conditions )

-> Inflation is also caused due to the global supply chain issues, covid ( sometimes it acts deflationary as was the case in delta but not omicron ) as stated above, and now the war ( print money for military spending and help countries ) causing oil, commodity and metals price shock.

Now remember

The FED and other central banks of the world can control demand side inflation and not the supply side in a normal economy where inflation is under the 4% FED target.

FED can’t raise rate too aggressively in war times due to demand destruction caused by oil and commodity shocks but in last meeting FED said they had to start raising rates and they don’t care about supply-side inflation going away eventually. Hence the word transitory is not being used anymore.

Two scenarios :

Case 1 :

FED is right inflation will go down due to war. Which in turn will happen when Russia backs off. Which in turn will happen if Putin doesn’t remain in power or he signs a peace treaty.

Ans : Then FED is doing things right by raising quarter basis pts.( You don’t need Paul Volcker )

Case 2 :

The FED isn’t right. Nothing happens to putin and supply chain persists longer due to china non-covid policy.

Then inflation will continue to persist longer and higher. And raising quarter basis pts won’t do jack shit, and hence stocks and other assets will continue to go up as bonds sell off and real estate goes down with every quarter basis pts hike coz the money has to go somewhere. TINA they call it.

So now FED has to control demand side inflation coz the supply side arent going away. People want to protect themselves from inflation, and they think buying value stocks with pricing power is the way to go. That’s what’s happening right now

You got another two scenarios

Case 1 : You need a volcker now ( This is about to happen now that FED leaked the msg b/w UK and USA central bank. They are preparing for Recession )

If you Volcker us then demand will go to 0 and kill the economy. But will inflation, from Russia’s shock, go away. No. High inflation with high unemployment will remain. Stagflation is what we get now. Worse of its kind coz FED two goals didn’t get accomplished. Bonds get destroyed due to yield shocks, and so will other assets, too. And then later global shock eases and no more hiking. Now you might see bond gold rally because now we are in a great depression where a slow down in economic activity will last longer.

Remember : Gold is being manipulated by JPMorgan and the government because they don’t want people to invest in it.

Case 1 : You don’t do a volcker

Kick the can down the road. Just like previous cycles when they just ignored the eyes on the housing bubble and let it prop so much that it burst on its own. And then you bail out by injecting QE. This time too, they could inject QE+, but after a recession and then devalue your currency more and send stocks and other assets to freakin mars coz, you already visited the moon in 2021.

Or you could just hyperinflate now and pay all of their debt. Lose global reserve currency status and follow Japanese policy. But you need balls for that. XD’

XLK/SPX and Color : Orange 10yr bonds yield

Yes guys, there is a chart for the sigma bubble collapse. What this chart suggests is that as the 10y bond yields went down from 2000-2020, the Nasdaq index outperformed the S&P500 eventually throughout the time.

Right now we are at the kind of special region where “breaking the white line” will trigger a black swan in bonds. Now I honestly dont know what will happen to stocks.. But if yields keep getting destroyed by the rise in interest rates, then eventually a time in the stock market will come when it will be overloaded by the bond holders who are running away and going for TINA in stock market. If the bond becomes lucrative enough, say like 5-10% investors will rush for it quickly and hence thereby causing the dot-com style collapse.

Hence you hear suits and institutions come on and tv and say things like ” Yah, FED isnt gonna raise rates more than 4 times this year “

But if you believe that bonds are gonna “reject from the white line”, then why the hell are you in the stock market. Kindly exit the doors right now and buy 10yr and 2yr bonds at 2.3%. One for trading and other for investing.

Note : White line hasn’t been broken till date. That could also mean everything collapse hence i wrote above breaking the white line will trigger something that i honestly dont know. So bond yields up and stock prices down. So housing down and the other unnamed asset too, is a possibility, too.

No one likes to see this chart. I got a comment from two posts earlier that there is no such thing as corporate greed. I would like to say, look at this chart.

Nowadays you are hearing things like billionaire taxes on unrealized gains and corporate taxes to rise from 21% to 28% in America. This all means government thinks yes, corporate greed is a thing, although i dont like the billionaire tax. It’s stupid to tax things that aren’t realized.

Corporate greed

The company now has to pay extra taxes. Their profits margin will take a hit and the only way to recover from it will be to lay off some people. Hence, unemployment should go up in theory. But it doesn’t always mean recession.

DXY

It still looks strong and would break $100 if the FED continues this tightening cycle.

SKEW

A lot of put options are still in the market, which suggests the fact that some people still believe we are in a bear market.

VIX

The VIX is still elevated above 18, which suggests fear is still present in the market with a lot of volatility.

Conclusion : I humbly oblige you people to sell everything before April end. Do not wait for Q3 exit liq rally. You exit in Q2. And wait for another -10% to -20% correction. Reason would be balance sheet tantrums like the 2018 May FOMC, which the market hasn’t thrown out yet. It still believes the FED doesn’t have the vote for that. Last time the FED tried this method, the overnight repo rate shot up 10%. FED knows they are in a tough spot. You can all see and hear Powell’s voice.

Pink : SPX , Orange : Federal reserve sheet

Thank you guys for reading this. I know it wasn’t that interesting and quite a lot of boring content in it which we have discussed already before. Sorry again guys. Next time I will surely give you your “Soveirgn debt crisis” In case some new viewers are wondering what I preach. It is to HODL cash for -50% drop from ATH or to buy GOLD/ Silver and Chinese Hong Kong index and stocks.

Lots of love. Hope you all have a great spring and you guys take that vacation. Sell in May ( April last week ) and go away is what Wall Street says.

Regards

Dante. My eyes see everything.

Submitted April 01, 2022 at 08:41AM by DesmondMilesDant
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