Rug Pull Season > Football Season

JC Parets
February 13, 2024

Rug Pull Season is here!

You guys know me well by now. I'm not exactly one of these fearmongers who spends decades trying to convince people that the next big crash is coming.

There are already plenty of those around.

I'm just trying to make money.

This is a very selfish endeavor for me.

Goal #1: Keep my money. I already have plenty. I want to make sure to hang on to it.

Goal #2: Turn all my money into even more money.

In that order...

There are different ways to accomplish these goals.

Sometimes, the risk is not owning enough stocks and not having enough long exposure.

A good example of that was most of the past 18 months.

Sometimes, the risk is having too much exposure to stocks.

I believe February of 2024 is one of those times.

The divergences have been piling up.

If it was just one divergence, that would be one thing. But when it's all the divergences, then I pay more attention.

Here is the "leader" of this "bull market".

The infamous Nasdaq100 Index:

These divergences were already adding up in things like the Dow Jones Industrial Average.

Now you're seeing the final "leadership groups" catching down to all the losing stocks in 2024.

Remember, the majority of stocks on the NYSE are down for the year.

So while the S&P500 and Nasdaq are up 5-6% for 2024, you're just not seeing it at the individual stock level.

In fact, you're seeing the exact opposite.

From an intermarket perspective, the divergences also continue to persist.

Here's another example, in case you still needed more evidence.

Stocks and Bonds have been trading together. And now all of a sudden they are not.

Which do you trust more, the stock market or the bond market?

  • The Bond market is sending warning signals.
  • Market breadth has been deteriorating all year.
  • Seasonally this Q1 of Election years is one of the worst quarters of the entire 4-year cycle. This time seems no different.

We're short equities. We're betting on lower prices for stocks continuing, as we've seen all year.

The risk for those of us who have plenty of money, is for prices of stocks to continue to fall.

I don't know how bad things are going to get.

Every major market correction first started out as a small one. But not every small correction turns into a big one.

We'll just have to continue to evaluate as the data comes in.

My suspicion is that we'll be sitting here around St. Patrick's day looking for stocks to buy for the Election Year Rally.

In the meantime, how will we know if things are getting worse?

I'm looking for an expansion of the new lows lists. We just haven't seen it yet.

While we've certainly seen the majority of stocks stop going up in price, we have yet to see a majority of stocks breaking down to new lows.

When you see that, you'll know things are getting a lot worse.

And we'll be right here talking about it. Because that's just how we roll.

Rug Pull Season is here. It could be even better than Football season, as long as you bet on the right team ;)

Let me know what you think!

JC

 

 

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