2022 has been a great year for traders who bought and sold false hope over and again, all while Wall Street's usual bagholders rode the slope of hope all the way down. 2023 will be about the same, only a lot steeper...
2022 had three declines and three rallies. The CNN Greed/Fear Index did a great job of predicting each top and bottom. However, as we see the upper trendline worked great as well.
Technical Analysis 101.
A Santa Rally is a tall order considering the Dow is coming off its best two month rally since 1975.
Still, false hope abounds.
So far, I have avoided making any predictions for 2023 because I am still focused on 2022 even though there are now only two weeks left. This is the timeframe when the wheels came off the bus in December 2018 and I am still of the belief that is the most analogous scenario.
In addition, once the REAL crash begins I believe full year predictions will be a fool's errand of the highest order. Suffice to say the first thing that will happen is that all of Wall Street's full year 2023 predictions will be instantly voided. Now imagine if that were to happen BEFORE the year even began. Biblical.
This year, the Nasdaq has fared far worse than the broader market. To date, this is the worst year for the Nasdaq since 2008 and before that 2000. Nevertheless, bulls are doing a great job putting lipstick on this pig.
I would point out to bulls that the Fed was already easing at the end of 2000 AND 2008. And as we see from Y2K, the Nasdaq continued falling for another two years AFTER the Fed started easing in 2000.
Which gets us to the housing market. So far, the bubble has remained mostly intact with some regional deviations. Few if any pundits are sounding the alarm on another full scale 2008 style meltdown. Except for Michael Burry who predicted the last housing meltdown.
He has been warning all year.
September, 2022:
Imagine ignoring the guy who became famous predicting (and profiting) from the last housing meltdown, because the morons at large were too busy listening to the same criminals as last time. Clearly, this is all repeating for a reason, to show how dumb this society has become.
Which gets us to the Automobile market and the meltdown of Elon Musk, a bubble unto himself, imploding in real-time. Recall that his net worth increased some 10x during the pandemic. And so he squandered the money buying Twitter.
Meanwhile, Tesla true believers are of the mind that Electric Vehicles (EVs) are somehow immune from the laws of economics. Unfortunately, nothing could be further from the truth. They are at the intersection of overvalued Tech stocks and over-priced luxury vehicles.
Up until now there has been a long waiting line to buy a Tesla.
That is about to change in 2023.
In summary, Tech stocks, housing, autos, cryptos, and the Elon Musk super bubble are all imploding at the same time. However, bullish pundits have done a fantastic job of making sure the sheeple remain clueless as to what is coming, which will serve to make the impending dislocation far worse.
The Fed's big mistake in 2021 was being too loose for too long. Their big mistake in 2022 is being too tight for too long. According to Forbes, they will realize their mistake by the second quarter:
"Given the emerging weakness in the economy, we see a continuation of disinflation over the next few months, turning to outright deflation when BLS’s methodology recognizes the downtrend in rents; that should begin in Q2 2023"
All of which means that 2023 will be like 2022 - a roller coaster ride. Only, this one will be for adults only. Because we all know that the first drop is the largest and scariest.
Especially when "no one" sees it coming. Except the guy who saw it coming the last time.
