S&P 500: THE CRASH-PART 2
By: The Humble Watcher
This idea is an update to the original idea called SPY-SHORT-BUY PUTS dated July, 2018. The first target of $240 has been successfully hit. The second target of the analysis is $210.
The main potential downside catalysts that have been discussed in the previous analysis are the following:
- The Fed (Inverting Yields/QE)
- Brexit (Hard/Soft)
- Europe (Survive?)
- Mueller (Constitutional Crisis?)
- Geo-politics (Supply-chain,Resources)
The stage is set for a major inflection point in human history. We are at the precipitous of the fiat monetary system being severely stressed. And, yes, it might even break. Global QE is unwinding which will exacerbate the coming collapse of fiat currency. Also, the world is about to take a leap forward in a major way which will be brought to fruition through technology. Life-changing technology such as 5G and Blockchain are the prime examples. The top technology stocks have generated most of the equity wealth in the last 10 years, but technology has become largely concentrated. At the end of 2018, five stocks – the FAANG stocks (Facebook, Apple, Amazon, Netflix, and Google) – comprised ~28% of the S&P 500, and Apple alone was larger than the bottom ~100 companies of the index. In fact, when we look the tech sector, the FAANG stocks comprise the bulk of that too, representing more than 50% of the S&P 500 tech sector. In recent history, they have continued to outperform the S&P 500. The FAANG stocks represent more than 50% of the S&P tech sector.’ The core nature of technology is innovation and change. It comes with no surprise that the technology landscape has vastly shifted over the past 10 years. Only 4 of the top 10 Tech companies in 2008 by market cap (Apple, Microsoft, Cisco Systems, and Intel) are in the current top 10 technology firms in 2018. We expect the cycle of disruption to speed up further, making the FAANG stocks unreliable from a long-term perspective.
The world needs an overhaul and it is overdue. A new, more prosperous, more efficient world awaits…