Date: September 28, 2022

Something Breaking Part II

So far, the only index to really break the June lows has been the Dow Industrials. The S&P 500, S&P 400 and Russell 2000 did a quick dive and recovery which likely stopped out many traders. At this point that does not qualify as a terminating move from which a major rally emerges although the stock market is getting closer both in terms of price and time. I have been targeting October and its bear killing history and nothing has changed yet.

Several times I wrote about the dollar, 2-Year Note and 10-Year Note as the most important things to watch. Those instruments have and continue to put tremendous pressure on risk assets and the stock market. The Fed is keenly watching these as well and something is breaking in the global system. Look no further than British Pound or Euro below.

Currency markets do not move like this during “normal” times. These moves are extreme and historic. And while this is great for Americans to travel to the UK and Europe, there are much bigger problems at play without a soft landing.

Volatility is here and it isn’t likely to quiet until the markets get to the other side of the bottom I see coming. Investors should always consider ROTH conversions when assets have depreciated as well as tax loss harvesting.

On Monday we bought IVW and FHLC. We sold SDS.


Paul Schatz, President, Heritage Capital