The markets have been, and are currently trading in a volatile, random price movement with any good or bad news swinging the markets all over the map. Both the S&P 500 and QQQ are hitting support. The question is, will it hold or is there more downside in the cards? And the answer is simply that nobody knows and only time will tell. The HCM-BuyLine® is negative, and we are sitting on a lot of cash, but even with about 25% or more in cash (depending on which system or fund), there is still a lot of movement in the accounts. With a large cash build-up, we are setting ourselves up for some big buying opportunities when the market turns back up. You have heard me talk about catching the turns, and this is where a lot of money is made fast. There are some wonderful companies that have dropped down to where they are not only attractive growth stocks but are reaching a point where they are becoming value stocks. Advanced Microdevices (AMD) and NVIDIA (NVDA) are two such stocks. Are we buying? No, not until the HCM-BuyLine® turns positive, but we are making our list. Being patient is the only course of action at this point in time.
You would think war would cause a very negative market, and in the very short term it does, but this is counter to what many think. In fact, many might logically believe that uncertainty from conflict means “risk off” until the conflict ends, but this is not the case. The last five wars or conflicts, from Vietnam to the last time Russia went to war with Ukraine in 2014, say otherwise. It is a classic case of sell the rumor and buy the news. After the bullets started flying, the markets stabilized and moved higher in all five cases. 8/2/1964 Vietnam, 1/17/1991 Gulf War, 10/02/2001 Afghanistan war, 3/20/03 Iraq War, 3/20/03 Crimean Crises, = Buy the invasion. Look to the most beaten down areas of the market for the best opportunities when the market turns. Faang stocks = expanding P/E + EPS Growth > 40% = Outperformance in 2022.