January 11, 2022

Volatility Reports 1/11/22

The Santa Claus Rally is Melting Away.

Since the spring of 2021, it seemed like everyone was waiting for the rush to value stocks. Well after a whip-saw double top the flow of funds into value shares vs the glamour growth stocks is here.

The first chart is the ratio between the two indices.

January 4, 2022

Volatility Reports 1/3/22

Markets do not experience panic sell-offs from top tick, the clock hit reset by the Dow on the 29th.

Furthermore, breakouts to new highs do not necessitate more bull market. The dilemma is as old as Shakespeare, to be or not to be, or ” do I trade the break or fade the break.

PLUS, I will not make any excuses for a pet peeve here, but smiley faces drawn on stock charts is not TA and they are not chart patterns. If it is not in Murhpy’s book, it is not TA. Rather it’s “making xhit up as you go along.”

I was just saying to some other perma-bull that they can spitball it all they want because the odds of seeming to be correct are backed up by the data on “calendar” annual returns. He put it this way, that in any random year the “odds” of being up are 73%. He goes on to point out the longer you hold, the greater the chances are you are making money.  He concludes that the perma-bears are doing something wrong.

I’ll make sure I will let Jimmy Rodgers know that, but Jimmy is not a rare exception.  I have two heroes, two masters that I take literally in their rules and approach their returns to prove it, George Soros and Stanley Druckenmiller.  Their primary rule is 110% ruthless ability to go in for the kill and never let the other side up, which is contradictory to the purported sage wisdom of the industry.

So the pivotal question you and I need to ask is