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For stocks, the prediction that I made last week has held up. Stocks trended down for one day, and then started to trend up for the next few days, aligning with the predicted elliot wave pattern.


Stocks/Equities

My Opinion on the S and P 500 remains unchanged. I was right through last week, I hope to be right this week. However, note that there might be a mid – long term bearish case for the S and P 500, presumably after it hits the blow of top as technically suggested.



Mid-long term bearish case: Aside from the bearish argument that was made in my last post, I have gathered some more analysis pointing to a downtrend in the mid-long term. First, there was a spike in insider selling, which is usually a very good precursor to actually selling in the markets. The following chart is from Barron’s



Furthermore, there seems to be an incoming resurgence in value stocks, in a situation that we had in the Tech Bubble. For the past few years, growth stocks have been way outperforming value stocks, but I think that this situation is going to change very soon. I think it is a good idea to stay away from technology stocks for the short- term, and focus on value stocks. Personally, the entirety of my portfolio has been value small or micro-cap stocks, and the other half large-cap stable value companies. The drop in the technology sector would also obviously effect the S and P 500. There seems to be two options: either the S & P catches up to the Nasdaq, or the Nasdaq drops to the S and P in a similar fashion to the Tech Bubble. To me, it seems likely that the ladder would happen due the previous factors that were listed.





Therefore, my strategy to stocks in the following short term would be to long(following weeks), and long-term, would be to buy value stocks. Personally, I don’t like to short because of its unlimited downside and hard timing.

It would also be useful to watch the NASDAQ in the short term on whether it breaks out or not. If it does, that could mean a confirmation for the S and P to continue going up.



Monday Morning Edit: Moderna just came up with a 95% effective COVID vaccine. Note that this is good news for stocks in general, but adds more to the potential divestment from tech into more “tangible” companies. This news also adds to the likelihood of an outperformance in the value stocks.

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