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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
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N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
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* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...please read my full Disclaimer at this link.

Dots

* If the dots don't connect, gather more dots until they do...or, just follow the $$$...

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Sunday, May 01, 2022

Remedy For Fed-Fuelled Wall St. Gluttony...Purging

* See UPDATES below...

What is Wall Street to do after gorging on cheap money, supplied in abundance by the U.S. Federal Reserve ever since they slammed the brakes on heavy losses caused by the 2008/09 financial crisis?

Purge, of course...as evidenced by the following 10 major technology stocks...all of which are currently in the FNGU ETN basket of stocks.

Judging by the massive haemorrhaging that has occurred this year, it seems that the respective values of these stocks were wildly over-inflated by pure speculation, based solely on cheap money supply...not on the actual value of these stocks and their products/services.

You'd think that the Fed would have learned their lesson by now and not fuelled another stock market bubble, as they've done in the past.

There's no telling where these and other stocks will end up over the next months, but with the Fed pulling the plug on their latest (failed) money-printing experiment, it appears that consumers are finally dictating what their priorities are...and spending their ever-shrinking dollars on basic necessities, and not the 'latest and greatest shiny baubles.'

As long as inflation continues to rage and the global supply chain keeps on sputtering and breaking, with talk of impending recession swirling in the mix, I doubt we'll see equity markets race to new highs over the next several years. Instead, volatility will continue to remain at the forefront of short-lived plunges and spikes in both directions...and indecision will plague market players.

Therefore, I still stand by my market assessment described in my post of March 8.

The following one-year charts of the 10 tech stocks that are within the FNGU ETN basket exemplify the volatility that has plagued equity markets since the beginning of the year, and, in some cases, for a year, or more.

The following graph shows the percentages that these stocks have lost year-to-date.

To add a little more perspective on a couple of these stocks, the following charts compare longer-term monthly price action of NFLX with FNGU and AMZN with FNGU.

I'd say that they, and especially FNGU, portray the gluttony and purging described above.


Some additional details regarding AMZN's poor performance are provided in the following ZeroHedge article.

And, there's this ZeroHedge market analysis...

As an aside, another example of this gluttony and purge scenario is the ARK Innovation ETF, ARKK (containing 141 stocks), as shown on the following monthly chart comparing it to FNGU. You can see that it has traded in lock-step with FNGU over the years.

ZeroHedge has provided a bit more 'colour commentary' on this ETF, as follows.

P.S. To repeat what I said in March..."Best of luck...it's crazy 'out there'...and rumours are flying everywhere!" 😏

* UPDATE May 4...

The Federal Reserve raised interest rates by 0.50% today. 

This tweet sums up where we're at, thanks to the Fed's overly-accommodative policies during the past years...too little, too late...they are a joke.

* UPDATE May 7...

I'm at a loss for words...which doesn't happen very often...

* UPDATE May 19...

The Fed's loose monetary policies have forced people to invest their savings into riskier assets that they wouldn't normally have taken in order to generate a real return...eventually creating bubbles which pop...