In the day to day sturm and drang it's easy to forget where we are in the implosion cycle. The permanently optimistic bulls have a way of convincing everyone that these dislocations we are seeing in markets are nothing to worry about.
Cathy Wood whose Ark ETFs sucked record capital inflows into the all time Nasdaq highs in February before falling -35% into deep bear market, is out this week soothing her trapped investors with happy talk. She says that high interest rates are great for Tech stocks so she has been doubling down on Tesla and other speculative momentum favourites. Her impending new price target for Tesla is expected to be at least double the all time high from February. She is the Mary Meeker of this era.
Over in SPAC land despite last week's monkey hammering, fake hope springs eternal. The number of listed SPACs now far exceeds the 2020 previous record.
Rising bond yields have been unkind to growth stocks. Their impact on the special purpose acquisition companies has been downright cruel. The SPAC boom has become the Spacpocalypse. Nobody should be surprised.
Tech stocks are bouncing back from yesterday's drubbing ahead of the final fiscal stimulus vote expected Tuesday night or Wednesday morning.
Here we see that after the first House vote on Feb. 27th, Tech stocks imploded lower at the 50 dma. Now the second House vote is at the 200 dma (red line). In the lower pane we see that overall Nasdaq breadth is languishing at the March 2020 super crash line.
In my opinion, Tech stocks will soon be re-testing the March 2020 lows.
So that takes care of Techland which is hanging by a stimmy vote. But now what about this final mega bubble, fake reflationary recovery? It stands to reason that reflation expectations will peak with the vote itself. After which, it will be the most crowded trade of 2021, featuring a big crowd and a non-existent exit.
"Bond bearishness hit a record level last week as investors piled into short bets on Treasuries."
In summary, anyone who still believes that crowded trades work, hasn't been paying attention to markets in 2021.
