Second half fireworks?

Happy July 4th to all those celebrating today and as well as to our international substack followers!  With the markets closed, it is easy to reflect on the 1H of 2022 with clarity.  We remember writing a piece the first day of January to declare the bull market rally was over.  We often write, debate, edit and sometimes refrain from publishing.  At the time, we believed the Fed had become the enemy of the market and there were signs of economic deteriorating along with exuberant end of year sentiment.  Why didn’t we publish such a bold call?  It seemed perhaps early but also too alarmist.  The Fed pivot to hawkish and “don’t fight the Fed” was something we learned early in our career working for Marty Zweig.  Well, he shall rest in peace, but once again he was 100% correct.  The 1H could have hummed along, could have kept solid growth post pandemic tough comparisons, but the Fed finally acknowledged rampant inflation and stunned with the admission their only tool is to stunt growth, at least temporarily. The rest is history.

Of late, we have been telling readers to wait for the 2Q reset, period.  We, of the active trader mindset, regardless, do try and play short term ideas both directions each day with the $RBLX long call Friday as one example for those subscribers who have asked to be on our Whatsapp daily distribution list.  However, the bombs keep going off around the market each day.  $RH guided down early June only to guide down even further last week.  The management team seems the most direct tell on consumer demand and reflected on inflation and higher rates as clearly causing their consumer to pause.  $MU on Thursday evening talked about reduced consumer demand PC and handset along with some inventory at the data center/enterprise segment.  To boot, they cut cap ex which killed semi cap names $ASML $KLAC $LRCX $AMAT.  The real question ahead isn’t who will lower expectations next, but rather who won’t have to during this economic slowing?  Importantly, even if you find the ones relatively immune, their stocks will likely languish as investors worry the management was overly confident or the multiple compresses with the market.  Yuck bad dynamic!  But, there is hope!