As expected

September 21, 202311 Comments

You guys know that I’ve been calling for a correction. I wrote a blog in early August noting that my view was for the highest probability of that correction happening in the second half of September. Wake me up when September ends – ValueTrend.

Long time readers of this blog, along with those who have read my books or taken my Online Technical Analysis Course know that market indicators warn us of a setup for a potential move. That move, up or down, needs a trigger. My analogy for a correction is that overbought indicators suggest the market is like an overinflated balloon. Like the fat balloon, the market needs something sharp to break it. The media then blames that sharp object for the market decline, not realizing that the setup was there for something to eventually break it.

The Fed (and the BOC) have given us the sharp object.

It’s a whole new world now for growth stocks. I have been warning you about their vulnerability since June. Growth vs value, which wins in 2nd half 2023? – ValueTrend

The Fed just admitted a) they have work to do on inflation, but at the same time, b) they are saying that the economy is wounded to the point where they need to stop hiking. This is highly “stagflationary” language coming out of the central bank. Recall that I have also been warning you for some time about potential stagflation. Stagflation strategy – ValueTrend

Tech stocks rallied in 2023, because of promised rate cuts in 2024, NOW the Fed is walking back those pollyannish promises!  Five companies — Apple Inc. (AAPL), Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), Nvidia Corp. (NVDA) and Alphabet Inc. (GOOGL)(GOOGL) — make up about one quarter of the SPDR S&P 500 index!

So. Where might the SPX land? I’ll cover this again in the “Ask Us” Answers video soon. But for now, please take a look at the chart below with my imbedded support levels. This chart illustrates why I have been calling for 4200-4300 as a landing point:

 

ASK US ANYTHING DEADLINE FOR QUESTIONS THIS WEEKEND

Don’t forget to post your questions – but please do not post questions on today’s blog. Instead, please go to this blog to post your questions. Deadline is Sunday midnight. Thanks.

Ask us anything: Deadline for questions Sunday Sept 24th – ValueTrend

 

Final thoughts

As you know, this blog offers some of the most accurate market analysis out there. BNN has acknowledged me being amongst their most accurate market timers. The cool thing is, you could pay lots of money for such analysis via a subscription service… and still not get the level of insights that this blog provides!

Even better – you know the annoying sidebars and flash advertising that everyone with a popular site annoys you with? Not on this blogsite!

With this in mind, I’d like to ask you a favor. Do you know of other investors who might benefit from this blog? If so, send them a link and encourage them to subscribe.

Click here to subscribe, to ensure you get the blog sent to your email. You’ll never be spammed. I promise (its not my style).

Subscribe – ValueTrend

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11 Comments

  • Thank you again Keith for this blog/vidos. I’ve been reading/listening for a few years now and you are really my type of analyst that I truly trust and enjoy (well, I only follow 3 analysts and you are one of them… my favorite ! lol).

    And thanks for saving us from the ”annoying sidebars and flash advertising” ! seriously, this is a plague and super annoying. It’s everywhere but here ! I’ve been waiting for this down turn from an overbought market with little breath for a while now. Very happy to finally feel it crack a bit. I hope it goes down to a major support before resuming the uptrend. Currently enjoying my inversed ETFs… (taking profits along the way).

    Reply
    • Thanks Lou–spread the word! I run this blog to look like one that, if I were not the writer, I would want to see.
      I guess my only “price” for this blog is my occasional Trudeau rant.

      Reply
      • I love those rants and I’m sure I’m not the only one. Keep feeling free to express your opinions (based on facts) !

        Reply
        • Lou–I always try to source my claims in a rant, as you know – and I do try to focus on the financial facts. I hold back on lots of other stuff – Jack Nicolson said in A Few Good Men…”You can’t handle the truth”! Eg–the PM separation was known for the past few years. Not financially relevant- there are lots of facts that most people couldn’t “handle”, especially when they are not yet announced.

          Reply
  • Regarding the interaction between politics and financial analysis, portfolio management, they don’t teach that in business school, but it’s a reality that is not unique to Canada. I am not surprised that MILLIONS pray on the altar of Tamara Lich and Chris Barber and of of QANON, Bilderberg group, Council of Foreign Relations, Club of Rome, the U.N.

    You also mention your are a specialist of reading the human mind remotely, of individual investors, and of their psychology. The political debate on youtube has been beating a dead horse about the percentage of the population who hold onto those beliefs like a life-line and cannot be moved away from them.

    In the meantime, let’s not get distracted from the financial aspects of the markets with the behavior of House Freedom Caucus in the USA, and their equivalent in Canada.

    Continue on with your great writings as we need more like this blog, who can ponitificate with accuracy what lines around the corner on the markets.

    Reply
    • I do not read minds. Not sure where you got that impression.
      I use investor sentiment studies of crowds to look for extremes, and fade the extremes. Individual actions can be isolated, but large populations of investors will show tendencies to move- on average- in a herd-like behavior.
      Read my book Smart Money Dumb Money to understand more on that subject.

      Reply
  • This blog is a must-read for me, and I so appreciate you sharing your analysis and years of experience. As for the rants, they’re the truth and I couldn’t agree more. Our PM is easily one of worst in the country’s history.

    Reply
  • Keith For what ever reason I was unable to comment on the recent video on oil. If you want to somehow transfer this comment to run with that video please do. What I think is missing from the conversation using XEG as your example is the multiple the producers are trading at. They are no where near what they were in 2014 and early 2018. The producers have never been in a better debt position and certainly haven’t shared the free cash flow as they do now. Compare them to an industrial company and the multiples should be much higher. Yes the commodity price won’t last forever but because they are showing discipline they will make money at lower prices, pay a dividend and buy back shares. Sometimes the charts do not account for industry changes such as lower debt or commitment to return of capital. If any company has significantly improved over a short period of time how do you compensate for that when charting off longer charts?

    Reply
    • David–the premises of technical analysis is that price is the teller of truth – both now, and over time. So, we can look at value factors such as the discount on oil producers – and note that there should be recovery in price. But really, all that matters is price. So if we get those breakouts, as my video discusses, its all good. Price will rise, value will be recognized.
      Sometimes you can wait forever for value to materialize, even if its logical that it should be materialized. The chart will tell us when that materialization is actually starting to emerge.

      Reply

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