Current situation for tech stocks:
1. Rapidly rising rates pressuring companies
2. Chip shortage limiting production
3. Inflation reducing consumer spending
4. Pandemic demand is gone
5. Legal concerns arising today
The worst part?
Tech stocks are holding up this market.
— The Kobeissi Letter (@KobeissiLetter) May 24, 2022
When that Nasdaq is down 300 points because of a breakdown in $SNAP, you know people are looking for a reason to sell.
Now that $AAPL has turned lower and tech stocks are no longer supportive, this market is becoming more emotional.
FOMO rallies turn into brutal bull traps.
— The Kobeissi Letter (@KobeissiLetter) May 24, 2022
Some air continues to come out of used car prices … @Manheim_US Used Vehicle Index +9.7% y/y, which is back to summer 2020 rates pic.twitter.com/dh48I4sh8n
— Liz Ann Sonders (@LizAnnSonders) May 24, 2022
Bond markets have finally begun to accept the fact that a recession is coming.
The $VIX is also back to 30+ and all safe haven assets are up.
This is the first sign of flight to safety since the bear market began.
Next we need a limit down day and $VIX to 45+ to set a low.
— The Kobeissi Letter (@KobeissiLetter) May 24, 2022
Yet another 70+ point reversal in $SPX without any headlines.
Markets have normalized these huge downturns in $SPX, soon will come the limit down day that we need for a bottom.
Bears are consistent, open lower and continue to pound the index lower all day.
It's like clockwork.
— The Kobeissi Letter (@KobeissiLetter) May 24, 2022
1 year from now: "Nobody could possibly have foreseen the liquidity firehose" https://t.co/HShTeFEkNw
— zerohedge (@zerohedge) May 24, 2022
”A sharper downturn in residential investment is now underway,” the Fannie Mae FNMA, -2.21% economist said, adding that he’ll revise downward his own sales projections.