“Optimism sounds like a sales pitch. Pessimism sounds like someone trying to help you”
Morgan Housel, The Psychology of Money
Good morning,
Morgan Housel is the GOAT of financial writing, and the quote above is one of my favorites.
We’re starting with it today because I want to keep both you and myself grounded.
Being cautious and being bearish in this business is a low-probability game. And when you are, and you’re right, it’s intoxicating. It’s easy to double-down, to get more bearish the lower prices go, and say, “See, I told you!”
But that’s not the mindset we need to have.
If it wasn’t clear before, we are most certainly in a correction. The market “is” going down.
How long it will go down, nobody knows.
Two weeks ago, I made the case for a recessionary bear.
Last week’s breach of the November lows “targets” 6100 (a 12% correction).
Or, we could bottom this week.
I am completely open to all three possibilities and anything in between.
What we do know is:
The market is going down
Market bottoms follow a predictable and repeatable pattern
Until we see that bottom play out, it is best to stay out of the way
The optimist’s view is that this is an opportunity. Focusing on the charts and data and ignoring the headlines is how we make sure it’s one that we capitalize on.
This week’s report will review:
S&P 500 technicals
What happens after a break of the 200-day moving average
The big shift in Fed fund futures
The worst week for gold in four decades
Breath and market internals
What isn’t making new lows
and more!
