Biden's Withdrawal May Cause Selling, Clearing The Decks For A Rally

seekingalpha07-22

Stocks may not have priced in Biden withdrawal, the potential for a further -2% or more for the S&P 500 in the first 3 days of the week.Market may need a 7% flush, VIX above historical norms. The ...

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The ...</p>\n\n<a href=\"https://seekingalpha.com/article/4705392-biden-withdrawal-may-cause-selling-clearing-the-decks-for-a-rally\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Biden's Withdrawal May Cause Selling, Clearing The Decks For A Rally</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBiden's Withdrawal May Cause Selling, Clearing The Decks For A Rally\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-22 10:26 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4705392-biden-withdrawal-may-cause-selling-clearing-the-decks-for-a-rally><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Stocks may not have priced in Biden withdrawal, the potential for a further -2% or more for the S&P 500 in the first 3 days of the week.Market may need a 7% flush, VIX above historical norms. The ...</p>\n\n<a href=\"https://seekingalpha.com/article/4705392-biden-withdrawal-may-cause-selling-clearing-the-decks-for-a-rally\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU1548497426.USD","symbol_name":"安联环球人工智能AT Acc","start_time":0,"source_url":"https://seekingalpha.com/article/4705392-biden-withdrawal-may-cause-selling-clearing-the-decks-for-a-rally","article_id":"2453712786","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/168626963/image_168626963.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2453712786","pubTimestamp":1721615190,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"While valuation is a very poor timing mechanism, it does set the stage for a market turn at some point. We all have heard repeated complaints about how this market is being held higher by just a few stocks. These stocks have had the bulk of the earnings, so they have garnered the bulk of the value. Now that the Fed has signaled lower rates, other stocks might also be contributing to the S&P 500’s valuation. So we are having a bit of musical chairs with the Magnificent 7 being a source of funds while portfolio managers rearrange weightings of different cyc","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU1548497426.USD":"安联环球人工智能AT Acc","TQQQ":"纳指三倍做多ETF","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","LU1861558580.USD":"日兴方舟颠覆性创新基金B","BK4551":"寇图资本持仓","LU2602419157.SGD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"AC\" (SGD) ACC","SVXY":"0.5倍做空波动率指数短期期货ETF","IE00BJTD4N35.SGD":"Neuberger Berman US Long Short Equity A1  Acc SGD-H","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","BK4581":"高盛持仓","MAGS":"The Magnificent Seven ETF","BK4096":"电气部件与设备","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","LU0029864427.USD":"TEMPLETON GLOBAL \"A\" (USD) INC","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","BK4099":"汽车制造商","TSLA":"特斯拉","LU0096364046.USD":"CT (LUX) I AMERICAN \"DU\" (USD) ACC","LU0109391861.USD":"富兰克林美国机遇基金A Acc","VXX":"短期VIX期货ETN","PLUG":"普拉格能源","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","BK4562":"SPAC上市公司","BK4541":"氢能源","TVIX":"二倍做多VIX波动率指数短期期权ETN","LU0052756011.USD":"TEMPLETON GLOBAL BALANCED \"A\" (USD) INC","VIXY":"波动率短期期货指数ETF","LU0082616367.USD":"摩根大通美国科技A（dist）","GOOGL":"谷歌A","BK4212":"包装食品与肉类","BYND":"Beyond Meat, Inc.","LU0061474960.USD":"天利环球焦点基金AU Acc","UVXY":"1.5倍做多恐慌指数短期期货ETF","BK4593":"纳斯达克ETF","BK4534":"瑞士信贷持仓","NKLA":"Nikola Corporation","BK4576":"AR","LU0820562030.AUD":"ALLIANZ INCOME AND GROWTH \"AMH2\" (AUDHDG) H2 INC","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4566":"资本集团","LU0466842654.USD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"A\" (USD) ACC","BK4527":"明星科技股","BK4538":"云计算","LU1852331112.SGD":"Blackrock World Technology Fund A2 SGD-H","BK4579":"人工智能","BK4550":"红杉资本持仓","LU1861215975.USD":"贝莱德新一代科技基金 A2"},"translate_title":"拜登的退出可能会导致抛售，为反弹扫清障碍","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"GOOGL":1,"MAGS":1,"NKLA":1,"TQQQ":1,"VXX":0.9,"TVIX":0.9,"BYND":0.8,"PLUG":0.8,"TSLA":0.8,"SVXY":0.6,"UVXY":0.6,"VIXY":0.6,"VIXmain":0.6},"content_text":"Stocks may not have priced in Biden withdrawal, the potential for a further -2% or more for the S&P 500 in the first 3 days of the week.Market may need a 7% flush, VIX above historical norms. The market is already in a rotation of sectors, and that creates fragility in the indexes.At the time of this writing, the Futures were up strongly. I would caution trusting that the futures portray the true direction of the market this week.   grandriver/E+ via Getty ImagesThe October Surprise Comes Early Often in American politics, something happens to roil the status quo in a Presidential election. For those of you too young to remember an October Surprise is a real thing, there’s even an entry on Wikipedia - October Surprise - Wikipedia. It goes all the way back to the 19th Century, and no, I wasn’t born yet. The most famous “October Surprise” was Reagan vs. Carter, but that is just my opinion. Since I am not at all about politics, my premise here is that the stock market never fully priced in a Biden withdrawal from the race. That means that the sharp selling that started last week could end in a crescendo that gets the market into an oversold condition. The S&P 500 is already down by 3%, the lowest we’ve been so far this year was about 5%. We could easily see a 2% flush on Monday and Tuesday, and that could be enough to flush out the “weak hands” that bought too late and at high prices. The timing is pivotal because the \"Tech Titans\" are beginning to report with Alphabet (GOOGL) this Tuesday after the market close. 5% however, might not be enough We might need more of a flush, one that takes us down to 7%. I do not wish for it, but history tells us that the market has at least one 10% sell-off a year and several other dips of a lesser extent. We have had an exemplary year of little volatility, but the VIX is well above a level projecting continued quiescent volatility now. The VIX is at 16.52 now, well above the 12 to 13 we’ve been seeing for months. The VIX is also above 15, which, in my opinion, is the historical norm of daily volatility. The VIX jump came out of nowhere, last Wednesday shooting well past the range we’ve been in. Check out this 3-month chart of the VIX courtesy of CNBC.com just so you can visualize this.   CNBC.com3 months of the VIX between 12 and 13 except a few days in May. I must have commented countless times on how this represented the stock market’s complacency. What changed? While valuation is a very poor timing mechanism, it does set the stage for a market turn at some point. We all have heard repeated complaints about how this market is being held higher by just a few stocks. These stocks have had the bulk of the earnings, so they have garnered the bulk of the value. Now that the Fed has signaled lower rates, other stocks might also be contributing to the S&P 500’s valuation. So we are having a bit of musical chairs with the Magnificent 7 being a source of funds while portfolio managers rearrange weightings of different cyclical sectors outside of the Tech Titans. While this rearrangement is being affected at some point, the pendulum will swing too far This happens all the time, greed turns to fear, and money managers want to preserve their double-digit gains for the year. Soon, the slower-moving managers will want to preserve their single-digit gains as well. Traders who got into the financials and other cyclical sectors will then decide they’ve made enough, and they will rush back into the Mag 7 names. I don’t know how much further the Tech Titans will fall, but their earnings results, especially for GOOGL had better surprise to the upside in Q2 and also future guidance to stanch further downside for it and the other titans. Tesla (TSLA) also reports this week, but I believe less weight will be given their results, unless they show improvement in deliveries or that their power storage business is shooting the lights out. If the GOOGL results do engender further selling, we could see -7% this week, certainly in the Nasdaq-100, which gives even more weight to tech. Let’s visualize what is happening. Below is the 3-month chart of the Roundhill Magnificent Seven ETF (MAGS).   Trading ViewDisregarding the price of the ETF, I am just using it to illustrate that we are on a knife's edge. We see that the lower lows are outlined by the black line, and the red diagonal line above it marks out the lower highs. This formation is then very bearish. If you prefer, the line of lower lows should be marked out by the parallel red line which also is a support line, we are about to break it. That next line of support would take us to about -7% for the Mag 7. It’s my guesstimation from where I am eyeballing the next level of support above 44ish. I just checked the Futures and they are up nicely So right now I might seem very foolish, but I would not rely on the US futures this early. Right now, the futures are under the sway of Asia and whatever their assumptions are, they don’t live here. That said, Even if Monday starts full of optimism, I will stick to being cautious. The chart above should be taken seriously, we still need to flush out some holders of the growth stocks everyone had piled into. I see the Nasdaq Composite is the outperformer, which is the exact opposite of my expectation. It won’t be the first time this happened, we’ll how things look by Wednesday morning after GOOGL reports. Why am I supposing that GOOGL’s earnings report won’t be stellar? It might be really good, but forward guidance might not. GOOGL is so dominant that if the economy is slowing even a little bit, it might show up in advertisements targeting the consumer, especially on the lower end of the spectrum. The trend might require a slightly lower forward guidance, and that is all the market needs to take down all the Titans. It’s at that point that I want to be a buyer. So if I can curb my enthusiasm for these stocks until Thursday, I might see some great merchandise at a fantastic discount. I expect a nice rebound the week after. My Trades Perhaps it won’t surprise you to learn that I already have hedges on the 3X leveraged NDX-100 ETF (TQQQ) via Long Puts, I also have individual stock shorts via long Puts as well Beyond Meat (BYND) Nikola (NKLA) and Plug Power (PLUG). I closed out my VIX Calls too soon at 13.5. The leap in the VIX took me by surprise.  Let’s all have some luck this week. I fear we are going to need it.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.26.3","shortVersion":"4.26.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2453712786"}