Miscellaneous stuff

I think I'm ready to start sending out my newsletter in Substack.  TinyLetter is going away, so I had to find a replacement, and I decided to go with Substack.  There will be some cosmetic differences in the emails, but hopefully there won't be any real snags.

SpaceX is heading for the moon.  On the one hand, I'm not a fan of moon missions because I think it's just a useless rock with no real promise, but on the other hand, it's still a really cool thing to do.  I even picked up some shares of Intuitive Machines as a result of the successful launch and in the hopes of a successful landing and mission.  Which brings me to my next point...

I bought shares of a couple of stocks on Thursday.  I did this in spite of the fact that I think markets are overbought and in need of a correction.  My gut tells me that this purchase of mine can be considered a contrarian indicator; in other words, my finally giving in is what will signal the start of the decline.  Will we see a correction within the next few weeks?  I think the odds of it just got significantly better.

As part of the moon mission, the Columbia apparel company is using its Omni-Heat Infinity technology to shield the craft from the extreme temperatures of space.  Here's a YouTube video about it:

 

I like and sometimes wear Columbia's stuff, and I think this promotional venture of theirs, while admittedly a bit gimmicky, is nonetheless pretty darn cool.  By modern marketing standards--by which I mean we live in an era in which corporate marketing departments seem to be purposefully trying to destroy their brands--it's downright genius.  After I publish this blog post, I'm going to go over to Yahoo Finance and take a look at Columbia's stock info.

I've started gaining weight again.  I'm about ten pounds heavier than where I'd like to be.  I'll try to reduce that in the weeks ahead.  My overall fitness level is really quite pathetic.

I finished The Hour of the Dragon, the only novel-length Conan story by Robert Howard.  It was a serviceable enough book.  I could have done without the "he ejaculated" dialog tags and other goofy devices, but it was still a Conan story, so it still had all the awesome stuff for which such stories are famous.

Charging ahead

I just can't get a handle on this stock market.  Nothing seems to faze it, not even the usual technical indicators.  RSI over 70?  Doesn't matter, we're going higher.  Low volatility?  Doesn't matter, we're going higher.  

Geopolitical unrest increasing in various places around the globe?  Doesn't matter.  Credit and mortgage problems on the rise?  Doesn't matter.  Chinese stock market falling to lowest levels since 2019?  Doesn't--well, you get the idea.

I think there's an inflation report coming out tomorrow, so maybe that will cause a ripple.  But I doubt it.

Rates unchanged as expected

The Federal Reserve left rates unchanged, and that's no surprise.  The question everyone is trying to figure out is when they'll start cutting.  From what I can tell, no one is considering the possibility of zero rate cuts in 2024, and the notion of a rate increase is basically unthinkable.  The market has priced in rate cuts, and any news that shakes that faith should have a bearish effect on stocks.

Meanwhile, the S&P 500 has charged ahead to new highs this year.

 

The chart is just a bit misleading, though.  The S&P 500 is heavily weighted towards the Magnificent 7 stocks.  Most of the gains have come from those stocks: Microsoft, Alphabet, Amazon, Apple, Meta, Nvidia, and Tesla.  A significant part of those companies' gains are undoubtedly due to the A.I. craze of last year.

So, those companies aside, what does the market look like in general?  For that, we look at the "equal weight" chart of the S&P 500.  In this one, all of the components of the index are given equal weight.  Here it is:

 

As you can see, no new highs in 2024 for the equal-weight version.

In fact, the lack of gains is even more apparent when you broaden the timeline out to five years.  Here's the normal (unequally weighted) chart for the index:

 

And here's the equal-weight version over the same time period:

In this second chart, the market peaked in January of 2022 and has yet to revisit that high.  Take out the bias towards the Magnificent 7, and stocks have basically gone sideways for two years.

I thought in December that we'd see a correction in the first quarter of this year, and I still think that.  So far, though, all the would-be catalysts for market declines have amounted to nought.  Red Sea traffic disruptions, Middle East conflicts, Russo-Ukrainian stuff, farmer protests in Europe, all of the myriad American domestic issues... none have succeeded in spooking the market.  It seems highly irrational to me, but, as the saying goes, markets can remain irrational longer than you can remain solvent.

Just FYI, though... the VIX is about where it was in late 2019/early 2020.  I expected a correction then, too, and we got an outright crash in February/March of 2020 as a result of the Covid panic.  Here's the five-year chart of the VIX with the 2020 spike readily apparent:

The starter gun is cocked.  All we need is some event to pull the trigger.

We'll see what February brings us.