Bears Are Capitulating, Perma Bears Getting Smoked. My Day with CNBC and Twitter
/Good Thursday morning all. The bears have started to capitulate. We see it in short covering and we see it in the data (put / call ration, collapsing VIX Index, volume and internals).
Capitulation is a process ... this market melt-up could continue for an extended period. We'll know if any significant reversal is in the cards by the internals and key market leading sectors (tech, small caps, growth, momentum). As always, we'll give you an advance heads up. Still a whole lotta perma bears getting their cleaned clocks, including the biggest gurus on the planet.
My Day with CNBC and Twiiter.
Over the years I've gone from being a religious CNBC watcher to pretty much not at all...just for breaking news and interviews only. The later was absolutely the case once it became clear that Trump had a chance to win the presidency. CNBC turned into the Hate Trump Network, 24/7. Hard pass. And what a failure. Within 6 months of Trumps victory, CNBC's ratings were said to have dropped below the Childrens Network Business Channel, which mostly features counting butterflies and puppies (or so I'm told).
But...CNBC has gotten better. I'm back on, meaning that I keep it running on mute in the background for breaking news and interesting interviews. Earlier this week, one of the panels was getting into Apples earnings, which would be released after the close. The entire set was bearish. Apple was going to $140 or lower, according to Mr. Wonderful. Yes, this jackass actually wants people to refer to him by that name (and I typically like Canadians a lot...Kevin O'Leary evens that scale).
Point being, even after one of the largest and most successful co's on the planet...one with more than $245 billion in cash...and had already dropped by 38% in price (from $231 on 10/1/18 to $142 on 1/3/19), these "gurus" were certain that Apple would keep getting their clock cleaned.
And then Apple reported earnings. Boom. Earnings beat, positive comments from Tim Cook and a big 6% move higher in the share price.
If you watch CNBC, I highly encourage you to do so only for the most relevant information to you. NOT for their buy/sell recommendations. I think maybe readers believe I'm joking when I say that the investment experts on CNBC do not publish their track records. Not a joke...they do not...their performance is that horrible. Remember, 90% of all active money managers do not beat the markets, year in and year out. Why should we be surprised to learn that CNBC wants to keep these figures buried deep.
On top of Apples move higher, Boeing announced a monster earnings beat with BA trading up a big this week. Same with chip maker AMD, a big earnings beat, withs shares surging nearly 20% yesterday.
Folks, not to pat ourselves on the backs too much, but we did say....day after day after day...that the December sell-off was an aberration. A mistake. That looking forward, investors will realize it was the buying opp of the year. That the Christmas eve massacre marked signifiant capitulation lows. That we MUST be buying aggressively,
In all humility, we nailed it. This is why the average VRA Portfolio holding is up more than 30%, from 12/24/18, pretty handily beating the S&P 500 gains of 13%. Frankly, it was one of the easiest calls of my career. J Powell's FED spooked the markets, at a time when liquidity was nonexistent and 150 hedge funds were already closing their doors and going through end of month forced liquidations. The FED...once again...our biggest risk.
The "recession is coming" group is beginning to look laughably silly. But these perma bears seem to be full on self hating masochists. A nasty lot of deeply negative fear mongers that appear to root for global anarchy. Global depression is on their annual Christmas wish list.
Precious Metals
Gold, silver and the miners are spiking again this morning. This breakout looks to be legit. Gold and GDX (miner ETF) are right at "significant" breakout points. Check out these charts
Until next time, thanks again for reading...
Kip
Since 2014 the VRA Portfolio has net profits of more than 2300% and we have beaten the S&P 500 in 15/16 years.
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