Bigs Start to Crash, Tech Short Update AAPL

To the Point 22-01-22

Bigs start to crash

As you’ve probably noticed, the markets moved down bigly last week. This is the largest drawdown since September of 2020.

Trump Bigly

Keep in mind, the reason the markets “feel” like they’re dropping heavily all of a sudden is because the bigs are finally stumbling. Most mid-caps, small-caps and foreign stocks are already in bear market territory.

SP Large Mid and Small Cap Forward PE Comparison Jan. 2022

The bigs have more to crash to become fair-valued or enter recession territory. That being said, bear markets are littered with spikes on the way down. In addition, the more we crash the more the Fed has less reason to “rein in inflation”.

The funny thing is, normally, the Fed would tighten causing asset prices to drop. But now, in the information age, everyone already knows the Fed’s playbook so they’re selling off in anticipation of tighter monetary policy. The market is basically doing the Fed’s work for them (sort of).

The mere appearance of a tighter Fed is enough to cause the market to react. Nothing is real anymore except the bullshit coming out of politicians’ mouths.

Tech short update – AAPL

The “doggy pile” is a smaller pile now with stocks like Netflix and Shopify collapsing much more than the rest of the high-flying stocks.

Last week, I recommended re-shorting the doggy pile, particularly Apple.

AAPL Short Jan. 2022

If you shorted Apple in the green area, I’m guessing you’re up around 9 – 200% depending on how you short. Likewise with others in the doggy pile. And I tip my hat off to you if you managed to short Netflix.

I’d look to take profits this week. As I said, bear markets are littered with spikes, so I prefer not trying to be a Big Short hero.

After taking profits, look for a 5%+ run up and consider re-shorting.