To summarize the past week/month:
Everything risk rolled over, except Facebook, Skynet, McDonald's and Philip Morris. Even gun stocks and brewers fell for the month. Consumer staples outperformed. Treasuries were well bid into the end of the month. Shorts covered on news that the economy is deteriorating at an accelerating pace...
We've seen this movie before:
The biggest near term risks are China continuing to meltdown and the implosion of the Energy sector which is not priced for $33 oil. "No one" saw oil at this level for any length of time, and now profit expectations are WAY out of alignment with reality.
As a sector, Energy has negative earnings so it has an infinite valuation.
Oil stocks as a ratio of oil:
All of which is to say that Energy stocks are about to get liquidated in size, because they are no longer accretive to portfolios...
Energy stocks with Emerging Markets:
The past week/month (Continued):
Corporate profits and revenue continued to deteriorate for the 4th quarter and forward outlooks
The U.S. economy slowed in the 4th quarter
The Fed admitted the economy slowed and paused rates at .25%
Global Central banks coordinated a massive short squeeze
Oil had a dead cat bounce on colossal volume
Chinese stocks continued to fall, hitting a new 52 week low
Apple got shellacked on weak revenue outlook
Amazon and Netflix rolled over hard. Facebook went parabolic
Biotech got obliterated, now down -44% from the highs
Financials were also extremely weak sector due to contagion concerns and yield curve flattening
Brokers sold off hard as Days Average Trades fell.
Stocks posted the worst January since 2009
Stocks and oil traded at a 95% correlation, highest in 26 years
U.S. oil inventories reached an all time high
New highs-lows hit the lowest level since Lehman (last week)
