VRA Investment Update: Solid Week That Should Lead to a Powerful Short-Squeeze. Everything is So Bearish That We Must Be Bullish.

Good Friday morning all.

It’s been a solid week for the markets, one that we believe is setting the stage for a strong move into end of month and possibly a mirror image of the first half of 2022. The economy is slowing, inflation is peaking, yields are topping and investors are too bearish. These are my views. If we are going to have the bear market rally that Tyler and I expect, the action of the last three days is pretty much exactly what you’d want to see. A solid day on Tuesday (Dow +640) followed by Wednesdays sharply lower open and then sizable rebound and then yesterdays solid smart money hour which saw each index close at the highs of the day. Nothing makes the shorts more nervous than this kind of action. Seeing follow-through this AM with DJ +220 and Nasdaq +110 in pre-market trading. 

Each day we get closer to the end of June is a good day. Soon, beginning of month and quarter equity inflows begin. Sizable buying.

At the same time, share buybacks are occurring at record levels and insider buying has flipped to aggressive. Saying goodbye to the worst month of year in the midterm election cycle might just be a welcome sight for our stock market.

This market should move higher into July. We have some fresh (and powerful) analytics to back it up…

First, this weeks AAII Investor Sentiment Survey from last night shows just 18.2% bulls and 59.3% bears. This marks back to back weeks with historically bearish readings. 

Readings of less than 20% bulls has occurred just 10 x since 1987 and the markets (S&P 500) have been higher 100% of the time over the next 6–12 months with avg gains of 13% and 23%.

Second, the S&P 500 is down 21% for the year, which would be the worst first half to any year since 1970. The good news is that in previous years we were down at least 15% through June (going back to 1932) we then saw the final six months of the year higher 100% of the time (5/5) with an average return of 23.7% (h/t LPL).

Third, the worst quarters on record are then met with great returns. Going back to 1962 when the previous two quarters were down more than 15%, the next two quarters were higher 100% of the time (7/7) with an average gain of 17% and then higher 100% of the time over the next year with a big 29.6% average gain. (h/t LPL)

Fourth, as Helene Meisler noted in her update this AM, both NYSE and S&P 500 just reached their most oversold levels since late December ’21, just before the markets rallied 6% over the next 2 weeks.
This matches our VRA System readings of extreme oversold, which we reached last Thursday. This is a near perfect set-up for a powerful short squeeze.

VRA Bottom Line: If there was ever a market facing a “wall of worry” to climb, this is that market. Yes, we are in a bear market and yes, short term moves higher should (likely) be treated as bear market rallies. However, we’ve already fallen 24% in the S&P 500, which is the average bear market decline without a recession. In addition, most stocks have been declining and in a bear market for more than a year with the average stock losing more than 50% in value. This is also our 3rd bear market in 4 years and we should continue to expect everything to keep happening faster, meaning that bear markets can very quickly turned back into bull markets. 

I believe most stocks have bottomed, certainly in the VRA Portfolio. As covered above, investor sentiment, analytics and our VRA technicals were so bearish/oversold that we must be bullish.

The economic savant at Evercore, Ed Hyman, does not see a recession. Hyman and team, for more than 3 decades, have conducted industry leading surveys with more than 100 co’s across 11 sectors. Historically their surveys have tracked GDP growth well. Their EVRISI surveys are still at a solid 57, which is far from recession level. My view: Biden is a horrible president and is working against America’s best interests. Biden is an enemy to America. America will be in a recession…in 2023. The question is, how serious will it be?

Oops! J Powell fact checked Biden’s “inflation is Putins fault” lies in his congressional hearing this week.
I’d bet serious money that he’ll be forced to “correct” that statement eventually.
Communists don’t like it when you deviate from the official propaganda.

Finally, yesterday I was invited to do an interview with a group of investors that call themselves “DWAC’D”, as in they love Trump Media.
It was a wide-ranging discussion with my latest information on DWAC, as this VRA 10-Bagger heads into the final stretch of completing their merger (which will culminate with a symbol change to TMTG; Trump Media and Technology Group), set to conclude in September. 

LINK: https://rumble.com/v19gxf1-dwacd-live-special-guest-kip-herriage.html

Until next time, thanks again for reading…

Kip

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VRA Investment Update: Team Lockstep: The Communist Takedown of America. Record Levels of Extreme Oversold Should Lead to Major Rally.

Good Friday afternoon all. Before we get to the markets, which has both a crash scenario along with some of their most oversold levels we’ve ever seen, we’re beginning this morning with “Team Lockstep”.

Here’s todays VRA VidCast covering this topic: 

https://rumble.com/v18sw9y-vra-midday-stock-market-commentary-june-17-2022.html

Team Lockstep: The Communist Takedown of America

None of this ever made sense. We’ve always known something else was going on here.

- The onset of mass censorship (as Tyler said in his podcast yesterday, the good guys are NEVER the ones backing censorship). YouTube just banned us over our Wayne Root-Trump Interview. 

- The rigged 2020 presidential election

- CV Insanity, all over a flu that 99.9% survive

- Forced lockdowns, business closures

- Forced jabs. Take ’em or lose your damn job…which one’s it gonna be?

- Open borders. America is being invaded.

- Russia-Ukraine war. The wag the dog money grab (to the most corrupt country on the planet) that’s doing its part in ramping global inflation/food shortages.

- Food distribution plants catching fire/blowing up all over the country

- Baby formula shortages, the shutting down of pipelines and limiting oil/gas exploration, 40 year highs in inflation. 

All of this is happening while 90% of our elected officials…the Uniparty Ruling Class…marches right along in silence/agreement….in complete lockstep. It’s pure Cloward-Piven. 

* None of this is easy for me to write. I am a lifelong optimist that knows America is the best planet on earth and know that our best days are ahead of us. I am certain of it. I see an America that is being overwhelmingly red-pilled with midterm elections that should mark utter devastation for the Democrat Party. The kind of devastation that takes Dems decades to full recover from. 

*At the same time, this is no longer up for debate; we are witnessing attempts to intentionally destroy America. The ultimate goal of communists is to crash the American economy/financial system, making Americans desperate and fully dependent on the State. That’s how they plan on winning. We must all be on high alert.

A stock market crash is more possible today than at any point in recent memory. I still put the odds at less than 20%, but with “Team Lockstep Communists” in charge, we cannot put anything past them. 

VRA Market Update — Record Levels of Extreme Oversold

We’re in a bear market…the sellers are still in control…but we have now reached such deeply oversold levels that a bear market rally should be ready to begin.

1) The DSI for S&P 500, Nasdaq and bonds are all below 10. Extreme oversold. 

2) The AAII Sentiment Survey just hit 19.4 bulls and 58.3% bears. Rarely have we seen readings like this. It’s happened just 10 times and in 100% of previous cases the markets have been higher over the next 6 and 12 months (with gains of 13% to 23%)

3) Our VRA short term momentum oscillators just hit extreme oversold on each major index. Over the last 18 months this has been highly reliable indicator of near term reversals.

4) 3 of the last 6 days have seen the TRIN (arms index) hit a reading of greater than 2 which signifies “panic”, which is typically followed by a major short covering move higher. To have this happen 3 times in 6 trading sessions is something I do not remember seeing in my career. 

5) In addition, more than 90% of stocks in the S&P 500 declined today. It’s the 5th time in the past 7 days.Since 1928, there have been exactly 0 precedents. This is the most overwhelming display of selling in history (h/t Jason Goeppert).

- Only 2% of the stocks in the S&P 500 are above their 50-day moving average. This is near historically washed out levels, only topped by March 2020 and October 2008.

VRA Bottom Line: As contrarians we should be ready for a move higher. All of the signs are there. There is real fear in this market.

Fed Rate Hike — Solid J Powell Best Presser 

The Fed’s .75% rate hike was fine…it just came 4–5 months too late. The Fed never leads….only follows. That’s a problem when they’re chasing inflation. I’ll give J Powell credit for a solid presser on Wednesday….his best to date. 

The problem remains that the Fed is hiking into a slowing economy. I know “many” people that simply do not believe the official data on unemployment being at 3.6% and consumers being “in good shape”. The bear market that we’re in is likely telling us the data is (at minimum) flawed. 

Throughout my career the Fed has caused every recession that we’ve had. Should we have a recession it will in large part be due to the fact that Joe Biden is president. 

If you watched Waynes and Trumps interview (here is the link) you heard Trump question whether Biden is even willing to try and make things better or if this is in fact “intentional destruction.” WAR pushed him on this several times. 

You know my thoughts; it’s absolutely intentional and it remains our biggest concern. If we had an honest financial media in this country that question would have been one of the most asked of Powell. But we don’t…so our media keeps going along with the banana republic that we’ve become. 

Wednesday’s action in the markets, following the hike and presser, was solid. However, as we saw yesterday, we are in a bear market which means that the sellers are still in control. That’s the reality until it’s not. 

Still, we are reaching heavily/extreme oversold on our momentum oscillators and essentially every investment sentiment survey echoes those “fear” readings. This years Fed meetings have featured major moves higher, lasting from a few days to a few weeks. We’ll soon see if that holds true this time.

Until next time, thanks again for reading…

Kip

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VRA Investment Update: The Repeating Pattern of Extreme Overbought Markets. Biden Must Be an R. 2A

Good Thursday afternoon all. There’s been a repeating pattern over the last 18 months that’s been as reliable as clockwork; once the broad market indexes hit extreme overbought on our VRA short-term momentum oscillators (stochastics) the markets then reverse lower. This took place yesterday, looks to be taking place again this AM and may continue into next week. 

As to how long this pause will last, the bottom line is that it just takes time. Best guess here is something like middle of next week before these extreme OB conditions wear off. However, if US markets find a way to continue moving higher, even in the face of being extreme overbought, it would be one of the most bullish signs an investor could see. 

Overbought markets that continue to move higher are “highly bullish” market timing signals. Regardless, this overbought pause should be just that…a pause.

As overbought as we might be in the short term, this market just keeps acting like it wants to go higher. 

If you watch much financial MSM you’ve almost certainly noticed the difference in tone. Instead of “buy the dip” we’re getting lots and lots of “fear”. 

Not the kind of reactive commentary that we hear at market tops….but very much the kind of commentary we hear near market bottoms. 

Yes, investor sentiment is that important.

As to the 3% 10 year, since you’ll hear no one talking about this today, allow me; a 3% yield on the 10 year t-note might seem high but that’s only due to our financial MSM’s poor memories. While yields have been plummeting in the US for 40 years (until this inflationary melt down in bonds), as an example, during the dot-com melt-up the “average” yield on the 10 year was better than 5% (as seen in the chart below). Even today, as we’ve just had the worst 8 months in the history of the US bond market, a 3% 10 year has left the descending trend line of the last 40 years intact. We would need to break 3.8% yield (roughly) to violate this all-important trend line.

The big picture remains unchanged; interest rates remain incredibly low

Between Fed Chair J Powell and yours truly, one of us has yet to change his views over the last 8 months or so. It’s still my “highly confident” opinion that the Fed will push the US economy into a recession if they take the Fed Funds rate past 2% (its 1% today). In no way, shape or form will the Fed be able to hike rates aggressively…just not going to happen. Instead..and again, my views are unchanged…by 2025 (or so) the yield on US 10 year t-note is likely to be negative. Financial engineering is still in the early innings. The US economy is far more fragile than the Fed is admitting to. They will make another major policy error unless they soon change course.

Ray Dalio (Bridgewater) agrees with Tyler and me. Soon, economic reports in the US will make clear that the economy is slowing…likely radically.
After all, Joe Biden (the kiss of death) is president. Enough said.

Energy Stocks At 99th Percentile Overbought

We are waiting for our opportunity to add to our energy positions in the VRA Portfolio…but based on VRA Investing System readings, that time is not now. 
XLE (Energy ETF) is hitting “extreme overbought on steroids”and is now trading 43% above its 200 dma, the highest levels of overbought in 8 years. 
The move higher over the last 2 weeks has also occurred on light volume. As much as we love energy stocks for the medium-long term, our investing discipline prevents us from adding to positions.
 
There are two major reasons to remain hyper-bullish…yes, even at this level of overbought. The global supply/demand story could hardly be more bullish. The smartest people I know believe that oil is headed to $175–200/barrel.
I think they are right. Secondly, energy stocks make up just 5% of the S&P 500. Stunning really…and heavily bullish. 
On pullbacks, we will be buying energy stocks…aggressively. 

Note: natural gas is “not” overbought and looks excellent on the charts.

Here’s the other reason to be concerned about energy stocks in the near term; Jim Cramer (like Biden, another kiss of death) is recommending that investors “should buy any dip in oil stocks”

Seriously, Biden MUST Be a Republican

If I want acting advice, I’ll go to Matthew McConaughey.
When it comes to the 2A, I’ll use the constitution.
Want to fix our broken system and eliminate 90% of gun violence and mass shootings?
It’s not complicated….not even close to being complicated.

Until next time, thanks again for reading…

Kip

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VRA Investment Update: Jamie Dimon Awakens While HIs Top Strategist is Full-On Bullish. Small Caps Are Cheap. 15–25% Surge Higher Into Year End.

Good Thursday morning all. Yesterdays action at the open was solid, only to be met by a warning from JP Morgan CEO Jamie Dimon that the US economy was potentially facing a “hurricane” going forward. When Dimon speaks investors listen and the big open turned into big losses by midday. 

However, if you saw all of Dimon’s comments, as we did, it was much more neutral in tone. Essentially, Dimon said “it could be a serious hurricane or it could be a tropical storm…we just don’t know”. 

Has Jamie Dimon been asleep for the entirety of this year? Earth to Jamie; we have 40 year highs in inflation, a Biden administration that’s acting more like a super villain than a lover of America, and a hot proxy war with Russia…the only country with more nukes than the US…that with one stupid mistake could quickly evolve into WW3. 

Frankly, odd and out of touch comments from the head of the largest banking empire in the US. Jamie, tell us something we don’t know. 

But here’s where it gets interesting. No sooner had Dimon’s warning sent the markets tumbling then here came the latest forecasts from JP Morgans Chief Market Strategist Marko Kolanovic (who reports directly to Dimon);

Kolanovic sees what we see here at the VRA; near record cash balances from money managers, investor sentiment readings at extreme fear, no recession on the horizon and China reopening (with massive amounts of stimulus). I also found it very interesting that Kolanovic believes “the war in Eastern Europe” (not “Putins war”…kudos) will likely “converge to a settled solution in the second half of this year”. This makes several people (that I trust) that have recently stated that things are going so badly for Ukraine that a brokered agreement is nearing. And, if you’ve seen what Germany is doing…they are now essentially neutral on the war, after pulling back all but the most basic of humanitarian funding to Ukraine…the tea leaves point to a serious loss of trust in the Ukrainian criminal oligarch puppet president Zelensky. Should the markets begin to believe that an end is in sight for Russia-Ukraine, look out above. 

Kolanovic also makes the important point that share buybacks will hit a record $1.2 trillion this year, placing a solid bid under the markets and that he looks for the markets to recover all of their losses by year end.

Here, Kolaovic makes the point that we made yesterday; small cap valuations are at all time lows.

VRA Strategy Update

The action in the markets over the last 2 weeks has been “textbook” base building, reversal action. Whether or not the final lows of this bear market are in place remains to be seen, but after last week I would put those odds in the 80% plus range. 

Important: We’ve just witnessed a rare and powerful reversal, featuring 3 straight days with better than 80% up-volume on the NYSE, an event that has only occurred 3 x times since 2010 (each previous occurrence marked the beginning of a major move higher).

As to this bear market…again, our 3rd in 4 years…with a view towards “history repeating”, a quick refresh here is worth a look as well. 

Following the 2018 bear market (which also took the average stock down 50% plus), here’s how the broad markets looked one year later:

- One year later the S&P 500 was up 40%

- One year later the Nasdaq was up 44%

- One year later the Russell 2000 was up 34%

- One year later the semis (SMH) were up 79%

Following the 2020 bear market (which also took the average stock down 50% plus), here’s how the broad markets looked one year later:

One year later the S&P 500 was up 77%

One year later the Nasdaq was up 100%

One year later the Russell 2000 was up 131%

One year later the semis (SMH) were up 131%

** The (incredibly) powerful moves higher following the 2018 and 2020 bear markets bodes well for the markets coming out of this 2022 bear market. The move higher from here could be equally remarkable. 

VRA Bottom Line: bear market rallies look just like what we’ve just seen. Fast and furious moves higher…and then they just end. Had we not already been in a brutal bear market in most stocks for over than a year, with the average stock falling more than 50%, I would be inclined to see this as more of a bear market rally. But, the economy remains strong without a recession on the horizon, led by continued strength in our two key VRA leading economic indicators; housing and transportation. With the midterms now right at 5 months away, with fund flows remaining heavy into equities (led by surging share buybacks), strong corporate earnings and extreme fear readings from multiple investor sentiment surveys, the odds favor the bulls…as I see it, by a wide margin.

CV Vaccines — More Shocking News — Genocide

Here at the VRA, for the better part of 2 years, we covered the insanity of the China Virus here…pretty much daily. It never made sense to us…it never made sense to you.
It was a plandemic through and through, a point that few even bother contesting today. 

The very worst part of CV insanity were the forced vaccinations. Our view was…and remains…the same. If you want to get jabbed, that’s 100% your call. But the moment these totalitarian fascists began mandating these poison jabs was the moment that we drew a hard line in the sand. 

— You want to command us to take experimental vaccines…over a flu with a 99.9% survival rate…from big pharma criminal operations with a long running history of deceiving the public, in order to line their own pockets?
EXCUSE ME?! —

Now, as we continue to learn the shocking “facts” about the vast dangers from these CV vaccines, there is new research (based on big pharmas own docs) that must be shared with everyone. Even if you took the vaccines, you deserve to know the truth. And maybe, just maybe, this research will convince some to pass on their next series of “boosters”. We must have Nuremberg 2. Must! 

Here’s an excerpt from Dr Naomi Wolf’s latest (with link to full article below):

“The lies revealed are stunning.

The WarRoom/DailyClout Volunteers have confirmed: that Pfizer (and thus the FDA) knew by December 2020 that the MRNA vaccines did not work — that they “waned in efficacy” and presented “vaccine failure.” One side effect of getting vaccinated, as they knew by one month after the mass 2020 rollout, was “COVID.”

Pfizer knew in May of 2021 that 35 minors’ hearts had been damaged a week after MRNA injection — but the FDA rolled out the EUA for teens a month later anyway, and parents did not get a press release from the US government about heart harms til August of 2021, after thousands of teens were vaccinated. [https://dailyclout.io/pfizer-vaccine-fda-fails-to-mention-risk-of-heart-damage-in-teens/]

Pfizer (and thus the FDA; many of the documents say “FDA: CONFIDENTIAL” at the lower boundary) knew that, contrary to what the highly paid spokesmodels and bought-off physicians were assuring people, the MRNA, spike protein and lipid nanoparticles did not stay in the injection site in the deltoid, but rather went, within 48 hours, into the bloodstream, from there to lodge in the liver, spleen, adrenals, lymph nodes, and, if you are a woman, in the ovaries. [https://dailyclout.io/internal-pfizer-documents-prove-knowledge-that-lipid-nanoparticles-in-mice-subjects-do-not-remain-in-muscle-but-were-shown-to-be-rapidly-distributed-in-the-blood-to-the-liver/]

Pfizer (and thus the FDA) knew that the Moderna vaccine had 100 mcg of MRNA, lipid nanoparticles and spike protein, which was more than three times the 30 mcg of the adult Pfizer dose; the company’s internal documents show a higher rate of adverse events with the 100 mcg dose, so they stopped experimenting with that amount internally due to its “reactogenicity” — Pfizer’s words — but no one told all of the millions of Americans who all got the first and second 100 mcg Moderna dose, and the boosters.

Pfizer skewed the trial subjects so that almost three quarters were female — a gender that is less prone to cardiac damage. Pfizer lost the records of what became of hundreds of their trial subjects.

In the internal trials, there were over 42,000 adverse events and more than 1200 people died. Four of the people who died, died on the day they were injected.

Adverse events tallied up in the internal Pfizer documents are completely different from those reported on the CDC website or announced by corrupted physicians and medical organizations and hospitals. These include vast columns of joint pain, muscle pain (myalgia), masses of neurological effects include MS, Guillain Barre and Bell’s Palsy, encephaly, every iteration possible of blood clotting, thrombocytopenia at scale, strokes, hemorrhages, and many kinds of ruptures of membranes throughout the human body. The side effects about which Pfizer and the FDA knew but you did not, include blistering problems, rashes, shingles, and herpetic conditions (indeed, a range of blistering conditions oddly foreshadowing the symptoms of monkeypox).”

LINK: https://www.lewrockwell.com/2022/05/no_author/dear-friends-sorry-to-announce-a-genocide/

Until next time, thanks again for reading….

Kip

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VRA Investment Update: Strategy Update. Pattern Changes, Fed 'Flexibility". The Anatomy of Bull & Bear Markets

Good Thursday morning all. Right at 3 months ago we began our planning for the Biden bear market and issuing our VRA Strategy Updates. We sold our VRA leveraged ETF holdings that focused on tech by selling TQQQ (3 x Nasdaq 100 ETF) and selling SOXL (3 x Semi ETF). We sold TQQQ at $45.94 (it fell to $25) and we sold SOXL at $34.85 (it fell to $18). We’ve also taken 112% in profits over the last 7 months (3 trades) in ERX (2 x Energy ETF).

VRA Strategy Update; that was then and this is now.

Our primary view is that; a) most stocks have bottomed, b) investor sentiment is so bearish that we must be bullish and c) we are buyers.

As we cover here often, most stocks have been in bear market for over a year. But today, if there’s a single piece of analytics that investors should be aware of, I believe this is it. 

After the first 100 days of 2022 this is the 4th worst start to a year for the S&P 500 in history. That’s the bad news. Here’s the good news. When we look at the previous worst starts ever for the S&P 500 we see that the rest of the year the market was higher 100% of the time with an average gain of 19.1%.

Got that? Based on history, going back to 1932, the worst starts to the year are then followed by markets that rise 100% of the time into year end and do so with rock solid profits.

AKA, bull markets follow bear markets…a theme you’ll see repeated throughout this VRA Strategy Update.

Pattern Changes and Fed Flexibility. 

As we’ve been covering over the last week or so, pattern changes appear to be emerging. From 3 straight days with a 600 point move higher in the Dow Jones, to continued improvement in the internals, to excellent smart money hours, this bear market is taking on a new personality. It may only be the set-up for a strong bear market rally, with still lower lows in our future, but I continue to believe that…for most stocks…the lows have already been seen. We are buyers. 

And another potentially massive pattern change…the Fed just committed to “flexibility”, the single word from the Fed’s FOMC minutes yesterday that turned stocks sharply higher on a dime.

Tylers podcast from Tuesday set this week teed up the Fed’s FOMC minutes of yesterday…a sneak preview of what looks to be taking place today. 

There is a new line of thinking beginning to emerge that the US economy is so clearly slowing (housing, trannies, retail and tech/social media/advertising is getting smashed) that the Fed will soon
signal that their aggressive rate hike scheme may not actually be quite so aggressive after all. Again, this matches our thinking. The Fed has been actively jawboning the markets lower, 
doing their best to slow/reverse inflationary concerns. But most of it is just that…talk. 

We just got a bit of confirmation from overseas as well as the ECB is now telegraphing a change to their runoff schedule for QE. Remember, the ECB is still actively involved in QE and is not set to stop buying govt debt until July.

The ECB is essentially acknowledging what we’ve been reporting in the VRA for the last few months. Their economy, post shutting down their banking business with Russian oligarchs and the insanity of attempting to block Russian oil/gas from European markets, has the European economy headed into a recession. 

Late Tuesday, ECB head Christine Lagarde said on Bloomberg “we’re not ready to say that the economy could be headed into a recession but we are watching closely, as always”.

That’s central bank talk for “yeah…a recession is just around the corner”.
We certainly see the US bond market taking note, as the 10 year yield has plummeted from 3.17% (5/9) to 2.74% (chart below).

 From a yield of just 2.3% in late March to a high of 3.16% on 5/9, this sharp ramp higher in rates resulted in the last wave of selling pressure in US stocks. 
Now, with the 10 yr yield reversing course, if the markets are beginning to discount aggressive Fed rate hikes…certainly with everyone already bearish and out of the market…a significant rally could be dead ahead. 
As deeply oversold as the markets are, along with the extreme fear readings of numerous investor sentiment surveys, the markets are ready for a relief rally (at minimum).

NVIDIA (NVDA): The Anatomy of Bull and Bear Markets

Bear markets make even the greatest of co’s look like the ugliest of car crashes. This is especially true in tech stocks.
It’s even more so in the semiconductors, which lead the markets in both directions. This is why you hear Tyler and I harp on and on about the semis.
There is no single group that matters more, when determining market direction and market personality. “Are we in a bull market or bear market?” can be determined most by watching this one group. 

Yesterday after the close, NVIDIA announced earnings and the stock got slammed as much as 9% after hours on a warning over chips and the lockdown in China. 

But that’s not the story I find most relevant. It’s the anatomy of a bear market that makes the NVDA meltdown relevant right now, in late May of 2022.

In the chart below, we see the very definition of an amazing stock. From nowhere, in 2016…just $6/share…a little company called NVIDIA began
to catch fire, as gaming and crypto currencies got red hot. No company did it better. 

From that 2016 starting point until November 2021, NVDA soared 5600%, turning a $10,000 investment into $560,000 in just 5 years.

This is where the relevance to today begins. When we drill down to Q4 2018 we see that NVDA had its first 50% + meltdown (in short order), dropping from $72/share to $30/share in roughly 4 months. 

From there it began its rocket ship move higher to $364/share, which it hit this past November. Buying into that 50% collapse made investors fortunes. But, it was a brutal Q4 bear market.
Sound familiar? 

Now, check out what’s just happened, again. In less than 6 months NVDA has…once again…imploded more than 50% (just as it did in Q4 2018).
And once again, this implosion is due (almost exclusively) to Fed rate hikes. China smyna…the land of semis/tech has been shellacked by central bank “awfulness”. 

BTW, on my podcast yesterday I called my shot…predicting that NVDA just hit their bear market lows of $152/share, down a stunning 56% from Novembers highs. VRA Portfolio Note: we own SOXL (3 x Semi ETF)

** The question that I believe smart money investors are asking themselves today is “at what point do great companies and sectors once again become a screaming buy?”

And this is when we must also take another look at Cathie Woods Innovation ETF (ARKK). Here’s that theme again…greatness, neutered by the brutality of a Fed engineered bear market.

From March 2016 to February 2021, ARKK soared from $13/share to $158/share, an 1100% move higher. No, its not the insane move higher that NVDA had, but we’re also talking about an ETF…rather than an individual stock…and $10,000 invested into the ARKK ETF turned into $110,000, in just 5 years. 

And now, look what’s just happened in 15 short months. ARKK just imploded 77%.

** And once again, the question that I believe smart money investors are asking themselves today is “at what point do great companies and sectors/ETF’s once again become a screaming buy?”

I’m not recommending either NVDA or ARKK here today (we own SOXL and our own portfolio of 10-baggers). I’m making the larger point that bear markets brutalize even the best investment stories. And I’m also making the point that bear markets end…and give way to even greater bull markets. 

Many believe we are at the precipice today, staring into the abyss, with fears of a systemic meltdown, World Economic Forum (Team Biden) style, featuring depopulation and a world war that might just end us all.

It’s essentially impossible to find anyone that’s bullish on US stocks. Again, that was pretty much me 3 months ago…but at my core I’m too much of an optimist on America and Americans to throw in the towel. 

Its the singular thing I’ve respected most about Warren Buffett and the great Peter Lynch; they always want to invest in America…because no country is better than America…and America always makes a comeback. Betting against America has been a losing proposition 100% of the time. 

And Buffett and Lynch also know that bear markets give way to new, and far more powerful, bull markets. 

From the S&P 500 to Nasdaq to Russell 2000 to the semiconductors these leaders just plummeted 20–50% + and did so in short order.

Many stocks are down 50–60–70%, (again, including Cathie Woods ARKK and its 77%, 15 month meltdown). BTW, Cathie Wood has never been more bullish.

Woods and her team of investing rain men/women just put out a research paper stating “advancements in AI will soon produce annual GDP growth of up to 50%/year”. 

As you can imagine, the pushback against Wood on this “out there” claim has been fierce. But man oh man, is Woods ever smart. No way am I betting against Cathie Wood, just as I wouldn’t bet against Elon Musk. Woods largest and most successful holding for years has been Tesla (although I did buy it cheaper than Wood).

Here’s the bottom line truth; today, there are so many bears that a true contrarian must be bullish. It’s not much more complicated than that. 

Again, I’m not calling a bottom. But I am saying that investment opportunities abound and that yes, most stocks have already bottomed. 

This wall of worry is about to be climbed.

VRA Bottom Line: I believe we will look back and see this bear market for what it is…a reset in both the economy and the markets…and that the best of America (and a newly red-pilled world), lay directly in front of us.

Until next time, thanks again for reading….

Kip

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