Closing Thougts for 2022

This is like 2000-2003!

As I have written yesterday, the industry groups that are strong right now point to deflation.

Interesting enough: there is a lot of dispersion in the market.

Small cap value momentum (with an industry group momentum filter) is strong:

China still strong:

Biotech still strong:

But the main market is weak!

IWM, SPY, SMH, EWG (Germany) —> 10 MA < 20 MA.

Breath is terrible:

The similarities are staggering.

High beta had a run in 1998-2000, like we had a high beta market in 2020.

We had a meme theme in 1998-2000 (internet stocks), we had a meme theme up to 2020 (Crypto and high beta names).

Plus, in 2022 there has been almost always a strong theme. At the beginning of 2022 it was energy, since the mid of 2022 it is healthcare (and up until recently energy).

In 2000-2003 the main theme was small cap value momentum.

I would like to write you the following: We are going to crash from here, get an all-clear signal and then get rich fast.

My take: this is not going to happen. This is a long duration difficult market. It probably will stay difficult.

But what I am also seeing: the whole way we had themes that have been strong. That are the themes we need to concentrate and a 6 Week bear market rally plus a strong theme is all we need to make some money.

Good traders are born in bear markets. Embrace the situation and sharpen your framework.

Have a great holiday season!

All the best and best regards.

Andreas