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New All Time Crack High

This is the morning report for February 8th, 2024:

While the U.S. "market" is attempting to hit a new all time high powered by the "fantastic four" stocks, the headline of the day is this one we got last night:

FR: Xi Jinping just replaced China's stock market regulator with a new Politburo lackey - something they've done every few years when their stock market is tanking. If Xi really didn't want his economy and stock market to fall apart then he shouldn't have kept the country in total lockdown for two years after COVID, he shouldn't have allowed property developers to build empty cities based purely on speculation, and he shouldn't have arrested Tech CEOs for being successful. Now these abject desperate measures such as banning short selling and other foolish policies that already failed in 2015 are having ZERO effect on stock prices. Tactical gimmicks such as swapping out stock regulators won't fix the ailing Chinese economy which has been in secular decline since 2008. One wonders if we've reached China's Lehman moment just in time for Spring Festival. If so, then Go Daddy will be coming down off its all time crack high.

On the topic of the parabolic stock market, I would point out that S&P 500 new highs peaked two months ago.

But when has that ever been a problem?

Trucking stocks, most overbought since last February:

The latest sign of froth, last night we got news from Arm Semiconductor which was Softbank's largest private holding until the stock went public last September in the biggest IPO in years. At first the stock languished below the IPO price and then last night it gained 50% in the after hours.

The problem for regional banks can be seen in the chart below. Here we see that relative to the % of NYSE stocks above the 50 day moving average, from a technical standpoint each time the ratio reached this level, bank stocks accelerated lower. The 3 wave structure points to the fact that TWO rallies in a row have failed, and now the bulls who thought the crisis was over are trapped. Which means very likely regional banks will go much lower than last year. At which point many more banks will likely implode.

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