TECH SECTOR MELTUP update - better not tell the Robinhood crowd...

originally published Sunday, July 26, 2020

Tech Stocks Tech Stocks

It has been a long time since we took stock of the Tech sector as a whole by looking at an index like the NASDAQ Composite and with it becoming decidedly frothy and having observed in yesterday’s Oil Market update that it may be riding for a fall, it is thought timely to review it now, as it is obviously of major importance for many individual Tech stocks.

We will start by looking at a very long-term chart for the NASDAQ Composite going way back to 1980, the reason being so that we can compare the current monstrous debt fuelled bubble in the sector to the only one that preceded it, the famous, or perhaps we should say infamous Tech bubble which peaked in the year 2000, which saw a lot of investors get rich quick and then a lot ruined almost as fast. The 1st Tech bubble clearly took the form of a classic parabolic blowoff move and the same seems to be happening now. What is really bizarre this time round however, is that the latest stages of this bubble, the advance to new highs of recent months, have occurred at a time when the economy is collapsing due to the effects of the imploding debt bubble being intentionally exacerbated by a gross over reaction to the virus pandemic. The two main factors driving this market higher in recent months have been massive liquidity creation by the Fed coupled with lots of “get rich quick” 30 and 40 somethings stuck at home and feverishly trading via Robinhood accounts etc. So far it has worked for them, but sadly they are likely to end up like those who didn’t know when to give it a rest in 2000.

The “inconvenient truth” in all this is that with the economy collapsing and people becoming unemployed and getting poorer, sooner or later Tech sector investors are going to be forced to face the reality that most companies in the sector will be making less money – or no money, and when that happens it will crash. There is a widespread and mistaken belief that this virus pandemic is just a passing phase, and that, sooner or later, things will return to normal, but as we will now proceed to see, that is not going to happen.

Because of its huge implications for the markets it is not “off topic” for us to stop and consider what this virus pandemic is all about, because if we can figure this out, we will have a better idea where markets are headed.

First of all it should be clear that the world is in the grip of an orchestrated mass psychosis, the biggest psyop (psychological operation) of all time with the threat posed by the virus massively exaggerated by the compromised mainstream media and leading figures in the medical profession in order to further various agendas, with much of the data regarding cases and deaths due to Covid-19 being fraudulent and grossly exaggerated – basically anyone who dies of anything is said to have died of it. I have given this matter considerable thought and read up widely on the subject in an effort to get to the bottom of it, and following are my findings, my deductions and conclusions, but if any of you have anything worthwhile to add that I might have missed I will be pleased to hear from you, although I may not be able to reply to all mails because of time limitations.

The first point to make is that it is not actually that easy to get to the truth, because all mainstream media outlets are controlled and directed by the forces that own and run our world, who for brevity I will henceforth refer to as the NWO (New World Order), which is highly appropriate with the NWO coming out in style this year. Thus all TV and radio stations, magazines and periodicals etc. have been and are working tirelessly 24 / 7 for months, since this thing started, to promote the official narrative and whip up mass hysteria, using the mechanism of fear and wall to wall non-stop coverage. Only in a few marginalized internet sites can you discover the truth about what is really going on and what underlies all this.

Special mention must be made of “The Mask” which warrants a paragraph all of its own. The importance of the symbolism of the mask cannot be overstated, which is the symbol of the New World Order, or to be more exact, the New World Order coming out of the shadows to take center stage and impose its will directly on the masses . Above all it is a symbol of fear – fear of contracting illness from others, fear of the disapproval of others who are now mostly wearing masks, and if not those then fear of being fined for not wearing it. By wearing the mask you are declaring that you accept the story, you are demonstrating that you will conform, you are revealing that you are scared of other people and of catching illnesses from them and that you will and are submitting to authority, and it even goes beyond that. These masks erase your individuality and curtail your interaction with other people, who cannot properly see your face or facial expressions. Control of people taken to this level is something that even Hitler and Goebbels never even dreamed of. All public figures up to and including Bolsonaro and Trump have been told to “get with the story or else” and wear the mask. When the sheep see TV presenters, political leaders and the people who they most respect like footballers and rap stars wear masks they follow suit unquestioningly and do the same, just as they all started getting tattoos a few years back for the same reasons. The mask is the single most powerful tool in the NWO’s toolbox for complete psychological dominance of the masses. Here is an excellent article on face masks by the UK journalist Peter Hitchens who is one of the only journalists who “tells it like it is” who has not been banished from mainstream media.

Many of those who are aware that this virus plandemic is a carefully crafted plot naturally assume the worst, which is that those elites behind it are intent on creating a return to a two-tier feudal system with the mega-wealthy controlling the rest of humanity, so that the independent middle class is wiped out and the majority of people either have to work for elite controlled mega-corporations or subsist on meager handouts. In addition, using new technologies, the masses’ lives will be strictly monitored and controlled, a process furthered by the introduction of the planned cashless society and forced vaccinations. The cashless society will make sure people behave and also pay their taxes, because if they don’t they will be economically cut off, and the vaccinations can later be used to get rid of millions of “useless eaters” like old people lounging around and consuming loads of medications in old folks homes. I wouldn’t disagree with any of this, because it’s human nature for wealthy people who are in control to want more wealth and more control. However, there may also be more altruistic motives driving their actions, in particular this virus plot.

The global warming emergency is actually real, despite modern day “Flat-Earthers” denying it, their suspicions aroused by things like proposed carbon taxes and the exaltation of little Greta of Sweden to near Sainthood. You only have to look around you at the increase in brutal heatwaves, widespread and destructive bush and forest fires and extreme floods etc. The reason of course is the growth of the human population to extreme levels, and the accompanying environmental destruction like the chopping down of the Amazon and Indonesian rainforests which regulated the Earth’s climate. As an example of devastation caused by unbridled human greed you only have to look at the loss of the Indonesian rainforests which was largely caused by greedy opportunists wanting to make fortunes out of palm oil plantations.

Now, if I were to have said to you just a year ago “Will you sacrifice your 1 or 2-week holiday on the other side of the world to help save the planet?” the polite answer you might have given is “Er – no.” Equally I could have asked “Will you give up your almost useless job that involves 2 to 3 hours of commuting in a car a day to help save the planet” the answer would have probably been something along the lines of “Take a hike, buster”. Now what has happened is that, by instilling widespread fear in the masses by means of the virus, they don’t want to take a vacation and they will humbly submit to orders to stay locked up in their houses for months on end. What I am getting at is this – in order to save the planet the NWO have created this global hysteria for the purpose of largely eliminating travel for the masses and for business travelers who can more easily conduct meetings on something like Zoom, and also to eliminate much commuting for jobs that can just as easily be performed at home, thus vastly reducing the consumption of fossil fuels and the resulting pollution – we have all seen the before and after photos they proudly present on TV showing the now clear air in places like Beijing and New Delhi. They are also using it to drive the mass vaccination agenda which can later be used for eugenics purposes, or in layman’s terms, population reduction. Evidently Greta was not enough to get the job done.

The drive to reduce consumption and resulting pollution is also a big reason for the intentional destruction of much of the US Middle Class that is now underway, in addition to the motive of making them less independent and thus easier to control. The US Middle Class have for years been renowned worldwide for their profligate consumption habits that are now being drastically and intentionally scaled back – the NWO can justify their own continuing profligate consumption on the basis that there are a lot fewer of them which is of course true. The point is that, like the Indonesian palm oil plantation owners, the common people cannot be expected to act for the common good or even for their own long-term interests – like greedy short-sighted children they have to be forced to do so. That’s a big reason for this virus plandemic – they are now forced to give up long distance vacations – and even trips to the next town – they are forced to stay at home and not commute, they are forced to wear a diaper on their faces when they go out to demonstrate their compliance with NWO dictates, they are forced not to go and squander resources in cafes and restaurants etc., and the wonderful thing is that, because they have no more idea of how the world works than the average Labrador retriever, they have been duped by the virus scare into giving up all these things voluntarily!!! In fact you don’t even have to force them – by the careful manipulation of their limited thought processes and the exploitation of their timidity and weakness you can get them to do literally anything you want - the plan was brilliant and audacious and so far it’s worked!

You have to feel sorry for all the thousands of workers in the airline, catering and hotel industries etc. who mistakenly think that one day everything will return to normal and that they will get their jobs back. No, they won’t, except that false hope can be used to goad the sheep into accepting being vaccinated so that they can have the privilege of flying again, then all they have to do is tweak the virus or bring out a new one – they have a whole suite of these things of varying strength developed in germ warfare labs – and it’s back to square one, back incarcerated in their houses, vaccination certificate or not.

Now you will understand, if you accept what is written above as being true, that demand for oil will stay depressed and is meant to. This immediately means that to whatever extent that raised hopes for increased oil demand drove the oil price higher in recent months, it is a false hope that will not be fulfilled. Equally, the idea that the virus pandemic will pass by and consumption patterns will return to normal is likewise a false hope, especially as the chaos and instability created by it is imploding the vast global debt bubble, triggering desperate stopgap money creation by the Fed, although they’ve got no problem creating trillions – all they do is press the “9” key on the computer keyboard and then keep their finger down on the “0” key – nice work if you can get it.

As mentioned above one of the primary goals of the pandemic is to destroy the US Middle Class, and the Middle Class in many countries, and by destroy I mean vastly lower their standard of living in order to reduce their consumption of resources and resulting waste and pollution etc. This being so we can readily see that there is going to be a lot less demand for much of the high priced and unnecessary paraphernalia produced by a lot of these Tech companies, which means that they can look forward to greatly reduced profits, and this prospect should in turn should help burst the bubble in Tech stocks. If I can figure this out then it is only a matter of time before a lot of investors figure it out too, which is why this mighty uptrend in Tech stocks is thought to be “running on empty”. Now we’ll return to consider the remainder of the charts.

On the next chart for the NASDAQ Composite index, which this time goes back to 1996, we see again the parabolic ramp into the famous 2000 blowoff top, and how after the ensuing bearmarket that was followed by a partial recovery, another low occurred in 2008 – 2009 coincident with the market meltdown of that time, after which it gradually cranked up again into another parabolic slingshot move that has culminated in the wild volatility of recent months which is a symptom of a top forming. Also shown on this chart for comparison are the Market Vectors Gold Miners ETF (GDX) and silver at the bottom, and you don’t need much investment acumen to see why silver looks like an infinitely safer and sounder investment here with much greater growth prospects.

Now we’ll try to make sense of more recent action in the NASDAQ Composite by means of the 3-year chart. This is an interesting chart for on it we see that what may be happening is that it is forming a giant “Flat bottomed Broadening Formation” which is bearish. We have seen some really extreme action in recent weeks with it apparently busting out of the top of this pattern, doubtless fuelled by over-enthusiastic RobinHood traders stuck at home who have gotten it into their heads that this market only goes up. What this looks like is a “throwover breakout”, a bull trap that could be followed by a brutal “crash and burn” scenario, especially given what we have just observed on oil’s charts and this is made more likely by the psychological impact in the US of the imminent scaling down of unemployment payments and the approaching end of mortgage payment forbearance, although we cannot totally rule out that the Fed plays Santa Claus and intervenes again to save the day – unless of course they want to get rid of Trump, since it will make it easier for Joe Biden to win if they let the markets tumble now (they can always goose them up again later) so that he can proclaim in his victory speech that he has “beaten Reagan by a landslide”.

Now we’ll conclude by looking at the shorter-term 5-month chart. As we can see calling a top in this market is certainly a dangerous game, and it is considered foolhardy to contemplate shorting it at least until it breaks down from the steady uptrend channel – it is not until you refer back to our 3-year chart that you truly appreciate that this channel is actually pretty steep. However, the longer this uptrend goes on the more dangerous it becomes, especially given that the real world economy is actually imploding. A breach of the uptrend channel will be the 1st warning of a potential major breakdown, and if it then proceeds to drop below the rising 50-day moving average it will open up the risk of a brutal vertical plunge as speculators jam the exits in a frantic dash for safety.

Your attention is drawn to a timely recent article by Charles Hugh Smith entitled The Sinking Titanic’s Great Pumps Finally Fail, in which he compares the US economy to the Titanic after it hit the iceberg. Although this is an analogy that has perhaps been overworked in the past, this time it is truer than ever. As he says “Now we have the Great Pumps of Federal Reserve money-printing and Stimulus, which in a close analogy are pumping trillions of dollars into the sinking U.S. economy. But just as the engines of the Titanic lost power as the water extinguished the boilers supplying steam to the engines, so the stimulus is only keeping the rising water temporarily at bay - it is not actually saving the "engines" of the economy from sputtering.”

Obviously the observations made here have important implications for some of our positions which we will factor in going forward, and as ever we should be able to turn the situation to our advantage.

End of update.

The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stockmarket analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.