Market Thoughts for March
All of 2022 and start of 2023 have seen a lot of people calling for Crashes, a lot of market events etc. Since May of 2022 we started trading between 3800-4146. We have had some outside candles but the overall has been between those ranges.
As I wrote in the “Everything Bubble Blog” I believe it was because larger money did not get out near the top, and instead decided to wait out the storm. Sillicon Valley Bank failure was a product of a large Bank having uninsured deposits, hoping to ride out the storm in hold to maturity securites, and then large withdrawals hitting causing the Bank to sell the hold to maturity securities at a loss.
March 4th in my Blog Post I wrote “But we are seeing Price Action change completely, and more aggressive selling. Market looks to be on the verge of our Capitulation moments, maybe not this Week, but do see it happening March/April timeframe.” The very next day was our short term top, and the banking issues started to come out. The price action we were seeing proved that we saw a lot of selling pressure going on.
So what does that mean for the short term? We saw only a 200 point pullback, as more banks failed, more are seeing systematic risk, and market is holding up now back within 50 points from where we pulled from.
Once we saw financial sector take large hits we started to see investors fleeing those stocks, and as we know the Money will go somewhere. We can see the stocks that are moving back up are the PG, AAPL, NVDA, AMD etc stocks. It isn’t a widespread mix at the moment, price action as a whole looks like money moving quickly out of the financials and some riskier stocks, and Big $$ parking it into stocks unaffected that can withstand.
Right now this looks more like a quick hard panic move, get money out of risk, and into safety until market can fully decide what to price in. We have some glaring issues like the Debt Ceiling, Fed tightening while increasing their balance sheet again, as well as how they can possibly backstop all uninsured deposits, especially with Debt Ceiling issues. But what we will also see is inflation possibly start to come down a bit, which has been one of our biggest hurdles.
As I pointed out above, we have traded in a range from May 2022 until now, and so far nothing has been able to crack the market. If inflation truly does start to come down, market might start pricing in a “soft landing” narrative, at least until bigger $$ can exit. Short term I expect some more downside possibly towards 3696 area, followed by a little bit of a Bullmarket.
