Buy And Explode

This is the second COVIDIOT top in three months. For the second time since the global pandemic began, gamblers are about to learn that printed money is NOT the secret to effortless wealth. But who knew?

The 1930s analog is right on track, as Herbert Hoover is falling back on his signature election-rigging strategy:

There are no long-term investments on the face of this planet. Everything is now a dumb money trade -  Look around to figure out where the dumb money is heading, get in first and get out before the stampede. Is this unethical? Only if you are one of the psychopaths counseling buy and explode. As I've said, the casino is going to trade in a wide Japanified range for years to come. Which means buy the dips and sell the rips.

Just like Suze Orman:

Orman in her own account buys the dips and sells the rips while recommending that everyone else dollar cost average into a depression. Warren Buffett gives the same advice - buy and hold index funds for the long-term. However, right now he is sitting on RECORD cash. Both are intrinsically using the same strategy: buy low, sell high. The sheeple who buy and hold just happen to be the bagholders on the other side of their trades. It's the perfect system. 

Looking at the S&P 500, we can see that this rally started running out of glue fumes several weeks ago. Recently it's been levitated by fewer and fewer over-crowded bubble stocks.

Having made two unsuccessful attempts to close above the 200 dma, Skynet just rinsed the bears above the 200 day at wave ('2'), the exact same way as at wave (ii): 

Here is year-to-date performance by major market sector. As we see, only Tech has been moving higher for the past month:

There are several dumb money bubbles taking place right now - some of which I comment on regularly. 

One bubble that has really taken off in the past week is the junk Biotech rally which is predicated upon the theory that every revenueless Biotech stock will invent the first COVID vaccine:

Among the companies going parabolic is Novavax which was at $4 per share at the beginning of this year and hit $61 yesterday:

Of course video games are on fire as a generation of boy-men have figured out they now have a new "career" playing xBox. 

I would point out that this mega Tech bubble is now a global rally, led by eCommerce "stay at home" stocks. 

Pop goes the bubble:

Silver confirms that precious metals are about to get monkey hammered. Gold (futures) peaked April 14th, although the gold stocks have been making new highs. 

I would be remiss if I did not show the central bank managed internet index again, chock full of the "big names"

Here we see the VIX back-testing the 200 day with the internet index in the background.

I think we all see where I'm going with this:

One thing you have to have in any pandemic is lots of guns

Now we know where all of the stimulus money went:

Here we see that options risk exposure is similar on the right shoulder as it was on the left:

In summary, the 1930s analog is right on track. This week, the U.S. made moves to implode Huawei, to increase scrutiny of Chinese-listed companies, and to fan the flames in Taiwan.

All moves to get China to react and therefore invite further trade sanctions.


As it was in May 1930, this rebound rally was just enough to embolden policy-makers to do something really stupid:

Here is the long-term count: