September 1: Market set to drop...RED day for bonds and equities

By: Jeffrey Cohen, Investment Advisor Representative
​US Advanced Computing Infrastructure, Inc.

September 1, 2022


Market will be down today. Will it? Will the ‘smart money’ decide to reverse course…or let us fall into a bear leg lower?
- Social media was silent on the markets
- Politicians are silent on the markets


IMO (not advice): Inflation is going to read lower. QT has not yet kicked in. Liquidity pressures are ‘in perception mode only.’


Equity and commodity and interest rate futures are all lower this morning.
From foods to metals, to stocks and bonds.
Energy is down too. Good news for inflation.


The US dollar is up (bearish)
The VIX is up (bearish)


Equity markets globally are down, for example:


The Nikkei (Japan) and China markets (including HK) were down
Europe was down
The US was down yesterday


Bitcoin has returned to the support level of $20,000 and is trading now at $20,004


Equity Market Breadth Negative
1: 2 A/D
24:384 NH/NL
FOMO is a cost effective strategy (stocks that are down may continue to fall for a while)


Fixed Income Breadth Negative
2.6:6.7 A/D
40:777 NH/NL
Largely centered in Investment Grade. Slightly better performance in the high yield markets. Weakening of credit quality in the top US corporates.


Per the Morningstar indices, and market sectors, all areas of the market are down, led by cyclicals down -0.86% yesterday.


The yield curve continues to be largely flat, and is rising (higher yields) with a 2-year peak yield of 3.45% and a 30-year yield of 3.27%. This morning bonds are down (across maturities) significantly.


My two stocks (in our portfolio) still look very weak. Technical analysis suggests massive quantities of selling. Percentages of the common stock outstanding sold in the last 1-2 weeks. Big selling.


Pre-market sectors:
Regional banks, evenly but sparsely up and down
Money Managers DOWN
Retail Mostly Down
Physical miners & metals, bitcoin (DOWN)
Cannabis and Tobacco (mixed)
Chips and Semiconductors (all DOWN)
Trucking, Transport and Logistics: DOWN
Enterprise & Personal Computing & Networks (B2B): DOWN
Quantum Computing Mostly Down


BX: A high-yielding stock we like in a money manager looks like a ‘great deal’ but in a declining market all stocks could and may go lower.

What do you do when the markets flash RED for equities and fixed income and economically sensitive metals and commodities.
When the US dollar is stronger than ever.


Balance of long and short
Not buy any new stocks until the pain subsides (let the market run lower).
FOMO is a low cost strategy in a bear market. Time to buy … tomorrow


For money managers, institutional, and high net worth individuals:
- There is significant movement in the markets.
- Look for your edges and trade them.
- There is enough movement to profit.