For bulls, reality is no longer an option. It's totally unaffordable...
Today we got news that tied China directly to Tech stocks, which is a key warning to bulls as to which markets are at the locus of collapse. The headline stated that Chinese officials are banning the use of iPhones. The only problem is that it's old news.
"The government staff were given these instructions by their superiors in recent weeks"
It is unclear how many central government agencies have been impacted at this time, although Beijing has restricted iPhone usage among certain officials for years"
News? Bullshit. This is merely media pundits hunting around for headlines to attach to imploding markets. Note that this article came out after the close on Wednesday, however the stock tanked DURING the regular session on Wednesday.
This September pattern is the same as August: A gap down at the beginning of the month. The August gap (black arrow) just got filled and now there is a new gap for September. Last month, Apple "beat" earnings, but the stock imploded. Pundits were at a loss for how that could happen. This time, they came prepared with stale headlines to explain what the chart was already saying.
In other words, what is the bigger story here as it relates to U.S. Tech? Is it China economic meltdown, or is it the Chinese government extending a ban on iPhones?
Nvidia is another good example of pundits at a loss to explain speculative capitulation. In May, Nvidia's earnings blowout was catalyst for a massive Tech rally. In August their earnings blowout was catalyst for Tech implosion.
This is what I mean, when I say "inside the crash zone". This is the first time semiconductors have failed a retest of the 50 dma and come straight back down. This is critical support. Notice what happened last time the 50 dma broke at this level. Look at the volume.
But the real warning came from the fact that semiconductor sales have only recovered back to the 2018 level. This new idea that a "Magnificent Seven" Tech stocks could carry the entire market while the majority of Tech stocks imploded, was a hyper-moronic theory, hence it was consensus.
Recall that during the pandemic, Cramer labeled the leading Cloud/Work from home stocks, the "COVID-19". Those stocks soared and then they crashed -80%. The same fate awaits the Magnificent Seven.
Back to the REAL story of continuing China meltdown, despite a record 54th consecutive currency intervention by the PBOC, the Yuan broke to a new 16 year low. The policy divergence between China and the U.S. grows wider every day. Now, all it would take is one more piece of strong economic data from the U.S. pointing to another rate hike, to implode China.
In summary, bulls face a second consecutive yearly bear market for the first time since the 1930s. Bullish pundits continually point out THAT as their primary basis for continued optimism - i.e. that the market has never rallied this far off the bottom and then made a new low - except during the 1930s. During the 1930s, this up-down bull/bear sequence repeated 10 times, roughly once per year for a decade. Which is what I expect to happen now. The low of course back then was -90% from the all time high. Do I expect that now? Unlikely, due to central bank manipulation. But -60% is highly conceivable, because that's what happened to the Chinese market in 2015 amid non-stop intervention. Or, see their currency above for another example of policy clusterfuck.
Be that as it may, today's bullish pundits will never predict a return to the 1930s, because under that scenario, no one needs their services.