This dead cat bounce has its leg

Happy Tiger's Year!

A few days ago, I shared with you the S&P 500 chart that showed a deeply oversold condition, poised for a rebound.

Today, I'm sharing a similar kind of setup but in an inverse way via VIX. For long time readers of my blog, you know VIX often serves as my crystal ball, a quite reliable one actually! 

As the chart shows below, not only did the VIX hit its highest level in a year during the recent market decline, but the Bollinger Bands are the widest they've been in a year. As we all know, when VIX goes up, the market tends to go down. But nothing goes up in a straight line, especially for VIX. When it goes above its BB range, it tends to come back inside the BB range. So, it's due for some sort of action that causes the bands to narrow. When VIX is in an extremely overbought condition as of now, what action followed is usually in the form of a falling VIX – which typically goes along with a rising stock market.

You probably noticed that we had a similar setup in early December (left blue arrows). Back then, the S&P gained about 300 points over the next month. But most technical indicators are more oversold today than they were in early December. So, there's a lot more energy to fuel an even stronger move.

It looks like we're set up well for a sustainable rally that lasts for a few weeks!🤓

Last Monday, S&P hit its worst closing of the month by crashing down to 4240ish. Using the last Dec bounce of 300 points as a guide, we should see 4540ish as a minimum of the oversold rally. Well, we are already nearly on the target now as S&P 500 closed at 4515 today. Are we done with the rally? I don't think so. VIX is still quite high right now at 24 and the daily momentum indicators are nowhere near the neutral level yet, not mentioning overbought conditions. And we are only seeing two days of a substantial rally. All the indicators suggest this round of rally, which maybe just a dead cat bounce after all, may likely continue for a while. I won't be surprised to see another 200 or more points of gain for S&P from here before this rally is over. Of course, I don't know exactly how far it can go and when it will end. But I'm keeping my long positions for now and use TA indicators to guide me when I should offload. 

While I'm quite bullish at the moment overall, I keep my mind clear about two things:

• It won't be a straight line up for this rally and we will see some back and forth moves on the uptrend;
• It's unlikely that we will see new highs from this rally. Rather, there is a high chance that we may see another plunge that is potentially more severe than the recent lows we just saw. 

Everything is on sales

I'm kind of in a buying binge these days, buying something nearly everyday this week, especially during selloffs.😇

You see, the headlines cannot be worse: The stock market has the worst January in the past 90 years! Actually it is the worst in all the market's history with record. Scarry, right?! Some indicators are even worse than those back in Mar 2020 when we got hit by the COVID. That's why it is difficult to blame those who are eager to sell no matter what. But that's actually the best time to buy as long as you have the gut and discipline😜 

Just to be clear, I'm not saying we are totally out of the woods by now and the worst is already over. I'm not sure about that. The TA damage has been done quite severely and it won't be that easy to recover. I'm just betting for a quick rebound, which may just be a dead cat bounce that may be followed by another more severe plunge. There is also a real possibility that we are in the process of coming off the ultimate bull market top and start to roll over to a bear market in the months ahead. It is too early to say but don't just count this out. As a trader, I'm more focused on a short term time horizon and deal with trades as the short term trend goes. But as a long term investor, it is also important to think about something more fundamentally. As such, I'm sharing something below that my friend has kindly shared with me recently. It is important to do some honest check on your portfolio with the following 6 checkpoints:

So run your portfolio through the six-step checklist below. And you'll be ready for anything the market throws at you…

1. Is your portfolio diversified? Numerous studies show that asset allocation accounts for more than 90% of your investment returns. Greater diversification also results in lower risk. So, a good start is owning a mix of domestic and foreign stocks, bonds, commodities, real estate, and gold.

2. Do you own true alternatives? Be comfortable with being uncomfortable. In other words, think outside the box. Get some exposure to "true" alternatives like collectibles, cryptos, private placements, and annuities. They'll generate long-term outperformance while shielding your portfolio in the meantime.

3. Do you have a rainy-day fund? Cash is often a forgotten asset class. But it gives you optionality. You never know what opportunities life might throw at you. Whatever they are, cash typically "meets the need" better than anything else. So, it's crucial to hold some. We recommend allocating up to 10% to cash.

4. What are your position sizes? Position sizing refers to the size of a position within your portfolio (the percentage or dollar amount of your investment). Our simple rule of thumb is: If a position gets stopped out of your portfolio, your maximum loss should be no more than 2.5–5% of your portfolio's value.

5. Do you use stop losses? Stop losses let you control how much you're willing to lose. They eliminate emotion (an investor's greatest enemy) from sell decisions. And they protect your investments from devastating losses.

6. Do you have an allocation to safer stocks? Invest in companies with quality balance sheets, attractive valuations, solid earnings, and strong growth prospects.

Just When You Think COVID Policy Can’t Get More Stupid… It Does (Jim Rickards)

Lockdowns don't work because they keep people in crowded conditions where they spread the virus. The safest place to be is outdoors with no mask getting sunshine and fresh air. So, basically the government has been lying about everything and killing people in the process. Has the public caught on yet? For many, the answer is yes. Places like Florida, New Hampshire and Texas are relatively free. But, for many others the fear factor based on government lies just won't go away. According to this article, 48% of Democrats say you should be able to fine or punish people who criticize vaccines. 55% of Democrats favor fines on people who choose not to take the mRNA gene modification injections. 59% of Democrats favor a policy that requires the unvaccinated to remain in their homes at all times (except emergencies). 45% of Democrats favor concentration camp quarantine facilities for the unvaccinated. The list of idiotic policies supported by large segments of the population, mostly Democrats but including some Republicans and Independents, goes on. You can read all about it. From a market perspective, you should see this for what it is. It's not about public health or common sense. It's about a kind of neo-fascist government control over the lives of people who just want to make personal decisions about their health and the health of their families. This will be a deadweight cost on the economy for years to come. Expect lower stock prices and slower growth as the cost of lunacy adds up.

It's Hard To Keep Track Of Biden's COVID Lies. This Article Makes A Good Start.

The government has told so many lies about COVID, it's hard to keep track. Fortunately, there are experts who do this for a living, so we have a pretty good list of lies from this article. Joe Biden said, "I will shut down the virus." He didn't. Last December, Biden said "This winter, you'll be able to test for free in the comfort of your home." People spent the winter waiting in lines in freezing cold at testing tents because there were no testing kits available. We're still waiting for them. Biden said, "I don't think [vaccine mandates] should be mandatory," before he imposed vaccine mandates on over half the population (many of which have been shot down by the courts). The list goes on. The criticisms should not be confined to the Biden administration. The intelligence community under Trump said the evidence was inconclusive that the virus emerged from a laboratory in Wuhan. In fact, the evidence is overwhelming that that's exactly what happened, although we won't know for sure perhaps for decades because the Communist Chinese have covered this up. Anthony "Mengele" Fauci (who has lasted through seven presidential administrations), said the virus wouldn't get to the U.S. and you don't need masks before the virus did get to the U.S. Now, he has become a mask fanatic. Fauci is worse than wrong; he's a monster who has cost lives. The vaccines are not really vaccines; they're experimental gene modification treatments that have never been used on humans before and are not fully tested for side effects. Anyone who gets the jab is a guinea pig in a Big Pharma drug trial. This serial mendacity has destroyed the economy and cost lives. It has released the inner fascist in thousands of petty bureaucrats. It has damaged a generation of children who will never completely make-up for the lost education of the past two years. The behavioral effects of this botched pandemic response will not last for years; they'll last for decades. Life will go on, but it will bear no resemblance to pre-pandemic definitions of normal. There is no normal anymore. The worst impact of all of this may be the loss of trust in important institutions including the Centers for Disease Control, the National Institutes of Health, and the legacy media. When trust is lost, it's almost impossible to regain. Added costs from inefficiencies attributable to this loss of trust will be a drag on economic growth for decades to come.

Powell did it again!

Well, as I said, Powell did what he does best again: spooking investors!

The market had been in a good mood all the time since the opening today, setting a stage for "Sell the rumor, buy the news". until Powell started to talk in the afternoon. Apparently investors loved what they saw in the meeting announcement but hated Powell's badmouth. Anyway, Powell is famous for that: not good at communications😣

For me, I still see a high chance of a rip-your-face-off rally that is coming. It is more of a technical probability when the market is so oversold at the moment. As the S&P 500 chart below shows, it rarely drops below its lower BB. When it does, it is always followed by a rally sooner or later. Given the scale of this dramatic decline, I even think the rally can be quite powerful.  

This is also supported by the historically extreme pessimistic sentiment we are seeing right now. Sentiment is a contrarian indicator, which means the extreme pessimism is quite bullish for the market . 

As such, I'm a net buyer for now. I bought more of my TQQQ calls when it came down again during Powell's talk this afternoon. I suspect we may soon start to see a weeks-long rally from the current level. 

"We’re In An Epic Bubble"

Jeremy Grantham recently made headlines with his latest market outlook titled "Let The Wild Rumpus Begin." The crux of the article gets summed up in the following paragraph.

"All 2-sigma equity bubbles in developed countries have broken back to trend. But before they did, a handful went on to become superbubbles of 3-sigma or greater: in the U.S. in 1929 and 2000 and in Japan in 1989. There were also superbubbles in housing in the U.S. in 2006 and Japan in 1989. All five of these superbubbles corrected all the way back to trend with much greater and longer pain than average.

Today in the U.S. we are in the fourth superbubble of the last hundred years."

The bubble is easy to spot in the chart below of deviations of the market from its long-term exponential growth trend.

As Grantham correctly notes, investors don't want to admit that a correction of magnitude is possible. However, the possibility of a 40-50% contraction to revert the massive extension from the long-term growth trend is highly probable. All that is needed is a catalyst, which so far has yet to appear.

Could the Fed be the catalyst? Maybe.

The problem is that crashes start slowly and then all at once. Only in hindsight does the catalyst become obvious.

The Big Risk This Week is FOMC

Wednesday is the Fed meeting announcement day, which is a huge uncertainty for the market. Betting on the market response is a toss of a dime and Powell is notorious for spooking the market during his post-meeting news conference. On the other hand, the market has been already beaten down so much with so severe pessimism created. It is hard to see a more severe selloff that will persist for days. Of course, we never know exactly what is in the mind of the Market God!  

Retail Investors Panic As Market Plunges (by Lance Roberts)

Last week, we noted:

Notably, despite the market's failure to hold previous gains, it successfully retested and held the lower trend line. However, sell signals remain in place and have not yet reached more oversold levels. The concern remains the Fed's more aggressive stance to battling the inflation surge, which hit 7% annualized this past month.

This past week, retail investors began to panic sell as "meme" stocks fell apart. Previous favorites became an anathema from AMC to Gamestop to Pelton and Netflix. The selling pressure took the S&P 500 below its trendline support, deep into oversold territory, and well into 3-standard deviations below the mean.

The selling pressure was worse in the Nasdaq taking that index to extreme oversold and 4-standard deviations below its 50-dma. Such is the worst start for the Nasdaq since 2008 and is at support from October lows.

Friday was problematic for stocks due to the $3.3 Trillion simultaneous expiration of index and stock options.

The "good news," if you want to call it that, and as noted by Zerohedge, is there is now a good bit of "combustible fuel" to create a counter-trend rally heading into the Fed meeting next week.

"The extreme negative / short Delta" across all option expiries is at risk of becoming a combustible fuel for a mechanical squeeze if spot rallies. There is over -$107B of front-week Delta alone."

All this means is that investors are now all on "one side of the boat," which is a prime setup for a counter-trend bounce.

However, it is likely a bounce you will want to use to "derisk" your portfolio.

The Big Risk Next Week

Next week is the January meeting of the FOMC. The results of that meeting will set the market's tone for the next few months. With the markets already in correction mode, the big question is whether or not the Fed will press ahead with monetary tightening.

On Friday, I took a poll asking whether the Fed will forge ahead with tighter policy (hawkish) or try and soften its stance to maintain financial stability (doveish).

What's the OVER/UNDER for a #Fed #FlipFlop going into next week's meeting?

— Lance Roberts (@LanceRoberts) January 20, 2022

As discussed previously, the Fed's most considerable risk remains the "stability" of the financial markets. While the Fed is concerned about "inflation" and its impact on the economy, financial instability is a greater risk. Just as in 2008, a cratering financial market undermines economic growth and exacerbates the risk of a financial crisis from a highly leveraged economy.

We suspect the Fed will ultimately opt for financial stability. However, the Fed has a long history of making the wrong choice first before coming to the rescue.

Don't panic!

This was the note I sent to my Family before opening this morning.

Even though I was sure a snap back rally could start any moment, I didn't expect such a huge turnaround today: S&P crashed by 140 points at its worst during the day but ended with a 12 points gain!

Unbelieve but also showed how the market is often doing during an extreme panic!! My portfolio got killed by nearly 20% at the intraday worst point to end up with 20% gain. 

I shared a few trades with my Family today betting for an oversold rally and this TQQQ did the best for me just within hours:

I'm also betting on a fast fading of VIX for now. So far so good😇

Of course, it is too early to be too happy as you never know what the market will do these days. Having said that today is the first day in the past week or so that the market didn't sell off towards closing but rather jumping high. At least this is a good bullish sign, suggesting a true turnaround may be coming!

Here is the note from a friend: 

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There's panic in the air, and blood in the streets.

Financial assets are getting crushed…

The S&P 500 is down more than 8% so far in 2022. Treasury bonds are down 3%. Bitcoin has lost 21%. And, Cathie Wood's ARK Innovation Fund (ARKK) – the most widely touted ETF of the past two years – has given up all of its gains from 2021 and half the gains from 2020…

Folks are bearish.

Last week, the American Association of Individual Investors (AAII) reported that the percentage of survey respondents looking for a rally in stocks over the next six months was just 21%.

Those looking for a decline topped at 46%. That's the lowest percentage of bulls, and the highest percentage of bears in 18 months.

That means we're probably not too far away from the start of a rally.

Investor sentiment is a contrary indicator. When everyone else is bullish, it's usually a good time to be cautious. And, often the best time to put money to work is when everyone else is bearish.

Nobody was "buying the dip." Most folks were buying puts and betting on even more downside in the days ahead.

Of course, anything can happen. Maybe those put buyers will be right, and the financial markets will continue to get crushed this week.

But, the stock market typically does not reward popular trade.

S&P 500: another 200 points lower?

Right now, we see blood everywhere in the market and  S&P 500 ETF  SPY is forming a bearish "Megaphone Top" chart pattern. Without going into details, this bearish signal indicates that the stock price may fall from the current level to the range of $415.00 - $421.00. The pattern formed over 54 days which is roughly the period of time in which the target price range may be achieved, according to standard principles of technical analysis. It means another 20+ points lower from here, which means over 200 points downside for S&P 500!

Of course, this is a pure TA analysis which may not necessarily materialize as such, however, this is the likely potential for the near term as the magnitude of the correction for the market. In the very near term though, judging by the panic extreme we are seeing right now, it feels like the end of the world but the market has a habit of not dying like that. My gut feeling is that we will see a decent rebound very soon that may go up as high as towards 465ish, which will then be followed by another plunge if this technical setup indeed plays out as such. So fasten your seatbelt for the next few weeks! A lot of volatility will surely come up. 🤓😉

Blood in the street!

We see blood everywhere these days!

As shown above a few mega-cap stocks like Apple (AAPL), Alphabet (GOOGL), and Microsoft (MSFT) are only down 5% to 10% from their all-time highs, 

but many smaller stocks are down 20% or more. This graphic also shows the weakness in the tech and biotech sectors and the strength among energy stocks, 

almost all of which are within a few percentage points of their 52-week highs (not surprisingly, as Oil Prices Hit Seven-Year High on Rising Geopolitical Tensions).

The start of 2022 suggests a good year for Energy and Value (by SentimenTrader)

The dollar loses its medium-term trend

A well-known seasonal pattern, originated by Stock Trader's Almanac, suggests that how investors behave in the first 5 days of a new year sets the tone for the rest of the year.

In theory, this is silly. There is no reason why such a short-term move would have any impact on returns nearly 12 months later. In practice, it's not so easy to dismiss.

Instead of rehashing the familiar, let's look at sectors and factors and see if there is any reason to be especially bullish or bearish on their prospects for the rest of this month and this year depending on how they were treated during that first week. Based on that theory, things are looking good for Energy, Financial, and Value stocks. High-beta investors might have a reason to worry.

When we look at how first-week winners performed for the rest of the month and the rest of the year, the results were good. 

Taking first place was Energy, which added to its gains during the rest of the month only 52% of the time, but during the other approximately 247 other days in the year, it rose a whopping 90% of the time. 

From naked calls to naked puts

Act like schizophrenia

This was how I described the market as it swings its mood fast and swiftly. Back then I was talking about in weeks to months but nowadays, we are talking about in hours. Yes, you heard me right, in hours!🙄 Yesterday shortly after opening, I told my Family that I placed a naked call order for TQQQ, i.e. I was selling TQQQ calls outright without hedges. At the time, the market was still in green and TQQQ was still going up but I got the sense that the market mood was too euphoric and could change soon. Well, my timing couldn't be better. Nearly minutes later, the market started to fall.....And we continued to see heavy selloffs most of the time today. Then late in the afternoon today it seemed to me that the market mood was too depressing and it was poised to change. So I advised my Family that I covered my naked TQQQ calls for a quick nice overnight profit and I started to sell naked puts for TNA, betting on a quick rebound. Well it appears to be another perfect-timing call as TNA turned from red to green by closing. It is too early to call a victory yet but I'm confident in my call. So basically I swung with the market mood from euphoria to depression within 24 hours by playing my bets against its mood😜  

Since the bottom of the housing crisis in 2008/2009, the market has enjoyed a fantastic bull run, which even the centurial crisis of the COVID pandemic cannot not stop! But we are seeing more and more evidence that this bull run has come to, or at least very close to, its top. To prepare you for the inevitable upcoming bear market, I will show you some strong evidence that often comes up during the market top formation. Here is one example: the cratering of the market's strong performers. I first warned about the potential faltering of ARKK back in Mar last year. After it fell 30% from its peak, I warned again that it could fall another 20%.  Looking back now, it was certainly a spot-on warning as ARKK has lost 49% from its top! When the top runners cannot continue to run, it is an early warning sign that the trend may soon change its direction!😣

Before finishing, let me share one interesting note I got from my friend about market fools. I hope my friends won't be such fools.🤓

++++++++++++++++++++++++++++++++++++++++++++++++++++++

Last September, Bank of America reported $1 trillion had flowed into global equities up to that date from the beginning of 2021. That was more than the previous 20 years of flows combined... Every last fool came out of the woodwork last year and went all-in on stocks.

They saw markets marching straight up for several years and eventually got tired of watching everyone else get rich. Last year, they finally deemed the well-established trend as safe enough to pour money into – somehow believing it would continue forever. So fools did what fools do... they put more money at risk last year than in the previous 20 years combined.

But here's the thing they don't realize...

After they've bet (not invested) every spare penny they have, there's nobody left to buy. A stock price can't keep soaring higher if no one out there is willing to pay that level. Pretty soon, many more shares are offered for sale at any given moment than are bid on to buy.

For now, though, the fools still have enough to keep the party going... JPMorgan Chase (JPM) analysts said that this past Monday was the third consecutive day when retail investors bought more than $1 billion worth of stocks.

Monday's $1.07 billion total retail buying put it in the 93rd-percentile of historical data. That means fools have only been more foolish 7% of the time... At this rate, they're a shoo-in to get a chapter (or two) in Lack's next book.

A bullish case for gold

U.S.-Russia talks Monday got off to a promising start. But during yesterday's round, it became clear Washington simply will not give in on one of Moscow's key demands — that Ukraine be kept out of the U.S.-led NATO alliance.

"Some senior Biden administration officials," said The Wall Street Journal, "have weighed stringent sanctions on Russia including disconnecting Moscow from the SWIFT international banking system and preventing Russian institutions from using the U.S. dollar."

If this really becomes reality, what will happen? Well, I think it will be a huge booster for gold! 

You see right now "the global share of U.S. dollar-denominated exchange reserves declined to 59.15% in the third quarter," writes financial blogger Wolf Richter at his Wolf Street site. Here's the trajectory going back to those early de-dollarization meetings in 2014.

This de-dollarization process has moved at evolutionary speed. But if Washington kicks Russia out of SWIFT and denies Russia access to dollars altogether? Then the de-dollarization process will accelerate much faster. Over the years, an "Axis of Gold" — Russia, China, Iran and Turkey -- has been pursuing a payments system that's "free of hacking, tracking or interdiction by the U.S. and free of U.S. dollars. This gold-based payments system will dilute and ultimately eliminate the impact of U.S. dollar-based sanctions. If Russia is kicked out of SWIFT, the net impact on the dollar won't be positive but hugely negative over time and global markets will lose more confidence in the dollar. Probably this is the reason why US$ had broken down from its important support, the 50 DMA yesterday. If the trend continues, US$ will weaken further at a faster pace. As such, this may be the trigger for gold to start its next leg up.  

50% net worth in Bitcoin!

Billionaire investor Bill Miller puts 50% of net worth in Bitcoin

"I think the average investor should ask himself or herself what do you have in your portfolio that has that kind of track record — number one; is very, very underpenetrated; can provide a service of insurance against financial catastrophe that no one else can provide; and can go up ten times or fifty times. The answer is: nothing."

“Passive ETFs” Are Hiding The Bear Market (by Lance Roberts)

Passive ETFs are hiding a bear market in stocks. That may sound like a strange statement when you look at major stock market indexes hovering near all-time highs. However, much like an iceberg, what we see on the surface hides much of what lies beneath.

Such was a point we discussed in more detail in "Wipe Out:"

"One of the problems with the financial markets currently is the illusion of performance. That illusion gets created by the largest market capitalization-weighted stocks. (Market capitalization is calculated by taking the price of a company multiplied by its number of shares outstanding.)

Notably, except for the Dow Jones Industrial Average, the major market indexes are weighted by market capitalization. Therefore, as a company's stock price appreciates, it becomes a more significant index constituent. Such means that prices changes in the largest stocks have an outsized influence on the index.

You will recognize the names of the top-10 stocks in the index."

The Nasdaq Bear Market

The same story holds for the Nasdaq, which is also heavily dominated by the same stocks as the S&P 500. As noted, without the support of the top-10 holdings, the year-to-date returns and overall volatility would be very different.

If we look at a sampling of the more "popular" trading stocks, you can understand current retail traders' frustration. A vast majority of 2020 and early 2021's high-flying stocks are down significantly from their respective 52-week highs.

Of course, probably one of the best representations of the disparity between what you see "above" and "below" the surface is the ARKK Innovation Fund (ARKK). While the S&P 500 index was up roughly 27% in 2021, ARKK is down more than 20%. That is quite a performance differential but shows the disparity between the mega-cap companies and everyone else.

As discussed in this past weekend's newsletter, such is a phenomenon.

"After Wednesday's post-FOMC selloff, more than 38% of stocks trading on the Nasdaq are now down 50% from their 52-week highs. Only 13% of days since 1999 have seen more stocks cut in half.

At no other point since at least 1999 have so many stocks been cut in half while the Nasdaq Composite index was so close to its peak. When at least 35% of stocks are down by half, the Composite has been down by an average of 47%. – Sentiment Trader

Short squeeze is ongoing.....

Following my prediction last Friday for an oversold bounce likely seen this week, we got a panicky selloff instead yesterday. I saw this coming before Monday's opening and here is what I told my chat groups before opening:   

It's difficult to be bullish right now especially when the futures market is selling hard today. But I stick my neck out again, betting on an oversold rebound this week. So I'm a buyer for any dip right now.

And here is what said after closing on Monday: 
What a day! While today's decline was much bigger than I expected, the price action was quite bullish as I expected. Anyone who dared to buy early today would have already gained substantially at closing Virtually buying anything is profitable. I'm buying a lot these days, from AMZN, TSLA, NVDA to shorting VXX. But you really don't need to pick specific stocks, just going with the indexes like SPY and QQQ will be good enough!

But the Market God will never make traders' lives easy and it decided to test the gut of traders once again by selling hard early today. And again, this is the message I sent to my Family with an idea to go long with the selloff:  
 
The selloff at opening today is technically a bullish move for the market, which creates a setup for even a stronger bounce for the days ahead.  

WEll, this does look like what is happening now. I think the Market God is trying to punish those who were eager to short the market early today and my gut tells me that we are seeing a market-wide short squeeze right now, which may last for at least a few days. As the way it goes, I won't be surprised to see a 4800 S&P before this bounce is done and completed🤗😇   

华裔学者重获自由发推文：感谢川普 追问奥巴马

美国普林斯顿大学的历史系博士王夕越（Xiyue Wang）发了一条推文，感谢川普总统仍然记得他被伊朗释放2周年，并配上了川普寄来的祝福信。 他在推文中写道：今天我收到川普总统的来信，我很感谢他还记得这是我从伊朗获得自由的2周年纪念日，这与奥巴马团队形成强烈的对比，奥巴马团队仍然欠我一个答案，为什么有伊朗核协议改变伊朗的恶行，我还是被伊朗扣为人质？ 川普总统在信中说：在这个欢乐的节日，梅拉妮亚和我想念你和你的妻子曲，还有你的孩子。 虽然没有任何词汇可以填补你们家庭在你被扣为人质时候的空白，但我们祈祷，在你回国后的两年，你们能一起找到平静、安慰和治愈。 请接受我们诚挚的新年祝福，顺祝新年快乐。 王夕越是一名中国移民，1999年前往美国留学，先后就读于华盛顿大学和哈佛大学，2013年起成为普林斯顿大学历史系的博士研究生，他潜心研究古亚洲的历史文化。 2016年1月，王夕越前往伊朗研究历史上的卡扎尔王朝（1794年－1925年），并在图书馆复印了多份历史档案，不料此举被伊朗认定为间谍，当年8月被伊朗政府逮捕，并被判10年刑期。 对此，普林斯顿大学表示，王夕越只是一名纯粹的学者，和政治没有任何关系，要求奥巴马政府出面让伊朗放人。 然而，奥巴马政府从来没有重视过海外美国公民的生命安全，对此不闻不问。后来，川普总统上台后，强硬要求伊朗放人，并且退出伊朗核协议以及加大对伊朗的制裁。 到了2019年12月7日，川普政府以交换的方式，释放一名伊朗科学家，从而将王夕越安全接回国。 在王夕越被释放后，川普总统发表一份声明，表示他会继续努力将被扣押在海外的公民带回家。 川普不仅救人，还帮王夕越报了仇！在王夕越被释放一个月后，美国展开了报复行动。川普总统亲自下令，用无人机把多次戕害美国人的伊朗革命卫队首领卡西姆·苏莱曼尼定点清除。当时苏莱曼尼正在伊拉克准备和伊拉克领导人会面，盘旋在上空的MQ-9"收割者"无人机发射导弹，将苏莱曼尼的车队炸个粉碎，苏莱曼尼本人也被炸成渣，仅剩一个戴着翡翠戒指的手掌可辨认其身份，从此伊朗再也不敢随便抓美国人质。 王夕越的推文受到很多人的称赞，包括许多伊朗裔的美国人。"Kylie Moore-Gilbert"说：我虽然不是川普的粉丝，但很高兴看到他发这封信给你，他用"人质"这个词来形容你当时的困境，自由可贵祝你快乐。 另一名网友回复道：你提到了一个很好很关键的点，就是用了"人质"这个词，而不是"拘留"，这是完全不同的含义，拜登政府是绝对不会用这样的词，无论是国务卿布林肯还是新闻发言人。 一名伊朗裔的网友向王夕越表示道歉，他写道：王先生，很不幸我们失去了所有的一切，我们的土地、我们的国家、我们的坟墓都被亵渎了，感受到你的痛苦，我向您道歉，王先生。 虽远必诛 派特种部队远赴非洲救人 事实上，王夕越不是川普政府营救回来的第一个在海外被扣押的美国人质，弗吉尼亚大学一名大三学生奥托·瓦姆比尔（Otto Warmbier）在2016年1月在海外被扣押，他的父母当时向奥巴马政府求助，但从来没有被当回事，反而要他们保密，别跟媒体说。 最终等川普政府用强硬的姿态将瓦姆比尔解救出来时，他已经陷入昏迷，回国不久后就去世，瓦姆比尔的父母强烈批评奥巴马政府漠视海外美国人的生命安全。 2020年10月，27岁的美国公民菲利普·沃尔顿（Philip Walton）在尼日利亚边境附近的尼日尔被绑架，川普总统直接派出了最精锐的特种部队——海豹6队，从弗吉尼亚州远程奔袭非洲，击毙6名绑匪，将沃尔顿解救出来，安置在美国驻尼日尔大使馆，全程没有一人受伤。 时任白宫新闻秘书麦肯纳尼（Kayleigh McEnany）表示，川普政府这些年来已经从24个国家拯救了55名被绑架的人质。

Nasdaq stocks have never acted like this

An unprecedented number of Nasdaq stocks have been cut in half (by SentimenTrader)

Valuations are at historical highs, companies are raising billions based on fairy dust, and the Fed is signaling a tightening cycle. All of these are scaring investors that we're on the cusp of a repeat of 1999-2000.

There are certainly some valid comparisons to that period. And there are some compelling counter-arguments as well. Whatever the fundamental and macro considerations, there is no doubt that investors have been selling first and trying to figure out the rest later.

Since the speculative mania in January/February 2021, many of the riskiest stocks have tumbled. It just so happens many of those stocks trade on the Nasdaq exchange.

After Wednesday's post-FOMC selloff, more than 38% of stocks trading on the Nasdaq are now down 50% from their 52-week highs. Only 13% of days since 1999 have seen more stocks cut in half.

At no other point since at least 1999 have so many stocks been cut in half while the Nasdaq Composite index was so close to its peak. When at least 35% of stocks are down by half, the Composite has been down by an average of 47% (!) from its 3-year high.

Bulls will suggest that most of the damage has been done, and the indexes should be able to soar from here. Bears will say this is just like the internet bubble, and the index is about to "catch down" to the average stock.

Is the decade long bull market coming to its end?

As I told my chat group last weekend, we should expect some volatility and a weakening market in the first week of the new year. Well, we got the taste of that. After I took the profit from the long positions on Monday, I placed a few bets on the short side as well as an increasing VXX. Wed's hard selloff paid off well to me and I took another set of gains. Now with the sufficient pessimism seen especially for the tech stocks, I'm betting on a quick rebound next week. Today's harsh selloff has offered a great buying opportunity I think. That's how I advised my chat groups last night.  

This is a decade long bull market. Is the volatility we are seeing right now indicative of the end of this long bull market? Per a cycle analysis in comparison with what happened during the dot.com era, we are very close to the ultimate top of this gigantic bull run. However, we are not there yet. We may still have a couple of months to go and we may still see a few new highs along with it. But March could be a critical timing point where we may see an explosive topping formation, followed by the start of a bear market that may last for months, if not years. 

Of course, so far this is just what this analysis is suggesting, which may or may not turn out to be correct. The Market God has its own mind and it has its final say what he is going to do. Sentiment-wise, it seems we are not euphoric enough often seen at the real top of the market as there is a great deal of worry everywhere. We are also far away from seeing an inverse yield curve, which had always been a precursor in the last 5-6 recessions. In other words, there are conflicting indicators, which do not allow for a confident prediction when the end of the bull market will be. But be prepared for the worst while hoping for the best! 

I will continue to play the short-term bets based on extreme conditions while waiting for more convincing evidence to show up when the ultimate top is formed. Accumulating a lot of cash is definitely a great idea during this very uncertain time period!😜😇

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New Years resolutions

Thought to share this list as part of my New Year's resolutions. I'm pretty sure trying to do so will make me more rich and happy in my life, not necessarily materially but as a whole in my life.  Hope you will feel the same!   20 Rules to Live by From a Local Jazz Legend Nathan Hurd   Sometimes wisdom can come from the most unexpected places. For example, I recently came across an interesting list written by a local jazz musician, Gregory Thompkins. He's a Baltimore native, and if you have a taste for jazz, you can check out some of his music here. His list struck a chord with me, particularly because of the time of year. So to kick off the new year, I thought I'd share this list and my comments on it. I hope that reading it will be an energizing way to begin a new slate in 2022. Compliment three people every day. Sincere compliments aren't given enough. The best compliments are about the human being, not an action they took or a gesture they made. "You're incredible" is more impactful than "Nice car" or "You did a great job with x." Watch a sunrise at least once a year - on a beach if possible. Watching the sun first envelop the day is one of the most awe-inspiring experiences there is. Be the first to say "Hello." This simple gesture is an acknowledgement of interest, openness and attention. Don't hesitate to invite others into your life. You never know what can come from it. Live beneath your means. This is the most basic wealth-building rule of all. If you don't live beneath your means or improve your means (through investment returns, for example), there's only one possible outcome - and it's one you don't want. Treat everyone like you want to be treated. It's the golden rule. It's amazing how often we all do things we would never want to be done to ourselves. I enjoy watching my children learn this lesson, and it's one we continue to learn all our lives. Never give up on anybody. Miracles happen. Anything is possible. People recover from 30-year addictions and stay sober. People go into remission after being diagnosed with a terminal illness. People turn around seemingly dire financial circumstances. And sometimes people really do change. This doesn't mean you should pour your energy into someone who brings you down. But you should never give up hope... Forget the Joneses. The act of comparing ourselves to others has wasted more wealth and destroyed more happiness than almost any other thought pattern. Feeling wealthy starts with appreciating what you have. In reality, appreciation is a great mentality to adopt when pursuing more wealth. You'll make better decisions and invest with greater prudence. Much of the world lives on a few dollars a day. Don't spend your days comparing what you don't have to what other people do have. Appreciate what you have, and you'll be much happier for it. Never deprive someone of hope. It may be all they have. Hope is a powerful force in the human psyche. It gives us strength to believe in possibilities that seem impossible. It must be preserved... especially in challenging times. Pray not for things, but for wisdom and courage. The greatest source of satisfaction in life comes from progress. Any time we learn something new (wisdom) or expand beyond our threshold of control by facing fear (courage), we progress. We grow. There is no stronger force for creating pride in yourself. Be tough-minded but tenderhearted. When you wake up and don't want to exercise, you should commit and move forward. Get in the habit of not negotiating with your own mind. Be tough against your inner critic, and be persistent about what matters most. But love deeply. Approach others with generosity. Make everyone you know feel that you admire them as a human being, even though you may disagree with something they say or do. Be kinder than necessary. There have been leadership studies that show people need to hear five positive comments for every negative comment to remain in a healthy frame of mind. This applies to everyone. Cultivate sincere kindness. If you look for it, it's always there. Don't forget a person's greatest emotional need is to feel appreciated. We all want to feel like we matter. Appreciation is one of the greatest gifts you can give. Keep your promises. People who keep promises are remembered. They are trusted. There's a nonprofit organization that I've been involved with called "because I said I would" that's dedicated entirely to this premise. Check it out here if you're interested. Learn to show cheerfulness, even when you don't feel like it. You can be the energetic leader in any and every conversation. Our moods are contagious. By learning to be cheerful, you can spark greater emotional responses from others, which will help elevate your mood in a virtuous cycle. Remember that overnight success usually takes about 15 years. It's easy to forget how far we've come. Appreciate every little win and every bit of progress. They add up to something very special over time. Leave everything better than you found it. Are you a giver or a taker? If you can find ways to give more than you take in this life, you'll look back at yourself with pride and admiration. Remember that winners do what losers don't want to do. Much of this comes down to discipline. It's important both in life and in wealth building. When you arrive at your job in the morning, let the first thing you say brighten everyone's day. Even if you're retired, you have a chance to set the tone of someone's day at the local diner or coffee shop. Don't rain on other people's parades. Back to the golden rule. Never waste an opportunity to tell someone you love them. Love is the oxygen of a life well lived. Sometimes we withhold love to protect ourselves. Don't. You'll never regret sharing your love with another. Until next time... Be relentless, Nathan

The miraculous ivermectin!

We came back from the 3 weeks trip in Europe on the new year's eve, and thanked God, SAFELY!

As I said in my blog two weeks ago, I was expecting a nice Santa Claus rally by saying: Who knows that these long positions may end up paying for my trips! Well, lucky me that the market is indeed playing out as I have expected. I closed a bunch of long positions for stocks and short positions for VXX today for a tens of thousands of gain that can pay off my trip several times😇🤗 What a great New Year's gift I can expect  ✌💪

Regarding this trip, this was really an adventure as the pandemic has surged again with Omicron spreading out like a wildfire everywhere! We spent a few days in Paris, then went to Barcelona for 10 days and the final week across France from the South back to Paris by car. Since we had visited so many different places and many of them were kind of closed spaces with big crowds inside, the risk of being infected was tremendously high. Honestly I was a bit worried when we went to do the pre-boarding Covid test as if positive, we couldn't fly back. But we both tested negative. What a miracle!! Sure we have been very cautious during the trip by implementing all the safety measures possible with our power as well as taking some supplements that are known to be beneficial in fighting against the virus. However there is no way we can be fully protected if ivermectin is not effective against the virus. Considering Omicron is so virulent and infectious that France has over 200K new cases everyday, how could we escape from it when we were only vaccinated with one dose of the JNJ vaccine? Yes, I cannot statistically prove it but logically there is no other explanation other than the miraculous drug, ivermectin, that has saved us during this high risk trip!! This is the second time we were testing the protecting effect of it and it didn't fail. See the first test we did back in early Nov last year. Needless to say, I will continue to take ivermectin for prophylaxis against Covid without hesitation when exposure to the virus is inevitable! 

Before closing, here are some snapshots of what we have seen during this trip along with the surging Omicron pandemic.

Specifically, we visited Paris-Bordeaux-Barcelona/Monistrol de Montserrat-Narbonne-Rocamendour-Lascaux cave-Loire Chateau de Chenonceau/Galeries Leonard de Vinci

Just for fun: we have also found a Night Pearl (夜明珠) as well as a natural beauty😜😂