August 17: Reminder that we are in a bear market

By: Jeffrey P. Cohen, Investment Advisor Representative & President
US Advanced Computing Infrastructure, Inc.
Chicago Quantum

Good morning, it’s August 17. We wore a RED shirt today because we thought the market would drop today. We are not happy that it is falling, but we are in a bear market and this is a good reminder.


Friday, Options expire on individual stocks that have them.


VIX was up 17% last night. People were buying downside insurance on their portfolios.


BBBY up pre-market.

There is a market to make money in individual stocks that is independent of the direction of the overall market. It happens in the summer (things are slow), kids off school and college, low liquidity and few people around. Quiet times.

We heard 2nd hand (hearsay) that the Federal Reserve / US Treasury bought its own 30 year bond issuance. Bought $38B of it this week.  By doing that, they are keeping yields lower and raising the price of the bonds. US Treasury PUT or a floor under bond prices.

Corporate Fixed Income was down.

ROTATION ALERT
Market Sector Rotation from Risky to Consumer based and lower-risk names.


Risk off on UST
1 month yields down
1, 10 and 30 year UST yields up. 10-year yield is up significantly.
DD: latest 10-year auction.
Bond futures are down (hard to tell).1/4 to 1 down.

The geo-political narrative has changed in the US mainstream media. Everything is bad economically, and there is no news internationally except that Europe will suffer from crushing economic hardship.
Ukraine Russia news is hard to find.
Taiwan China news is impossible to find.
Inflation is not in the news either, must have been fixed by that new law.
News is on the drought globally.

Liz Cheney (love her dad, Dick Cheney) lost her congressional seat in Wyoming.
She was not true to her party, and she paid the price for that disloyalty and lack of grace.

EUROPE stocks down significantly. 
VIX moderated. Big bets were made in Asia last night, and again this morning after the market opened.
Asian markets bought the puts against the SPY
Asian markets up significantly last night, and spent some of their earnings to protect their US equity positions.  Global players doing that too. Easier to trade Asian hours, probably.

Equity Breadth still solid. 80% trading above 50 SMA
34% above 200 SMA, bear market rally
2.5:1 new highs to new lows

Bitcoin dropping a little
US equities dropping a little. We might add bitcoin to our runs to see the price relationship to US equities.

US dollar is up


Housing inventories up, new housing construction and permits are down. Buying are walking away from house contracts. Housing is bearish today.


BBBY $28.35 seems very high for this stock today. Not sure what is happening.


IMO: Chicago Quantum: We need to ‘end or win or negotiate a settlement’ to the Russia Ukraine crisis. Ukraine can target Russia's energy infrastructure without taking a single civilian life in the process. 

$FMNB made it to $15.00 per share. Congratulations.

Now, the day is well underway and we are just passing Eastern Time Zone lunch hour. Stocks that are risky and high-BETA have dropped significantly today. This is not a good day for risk assets (after they have risen 100% or more since the June 16 low).

Our personal portfolio is down and the CQNS UP run picks are down as well. 

​Good luck to all.