‘Overbought and overpriced’: This investor sees a bubble forming for one popular group of stocks.


Investors wouldn’t be blamed for counting on the first losing week for the S&P 500 at three and deciding to start the weekend early. Stocks are up in early action, but that won’t affect five-day losses.

A mixed bag of data this week reignited concerns in some corners that the Fed could push the economy into recession with plans to raise interest rates?

This brings us to ourselves call of the day From Professor Jeff Bierman, chief market technician at TheoTrade, he sees a bubble for consumer staples, which he calls an “overbought and overpriced ‘safe haven’ rotation sector.”

Bierman doesn’t back down with a warning. “We’re heading into a recession and consumer staples are being valued as growth stocks when they’re actually value stocks. Marubozo signals that we are in for a deeper correction in consumer goods than we have experienced in the past few days,” he told clients (more on Marubozo below).

The group of stocks he talks about includes Walmart WMT,
Procter & Gamble PG,
Nestlé NSRGY,
Coco-Cola KO,
Campbell’s soup CPB
and PepsiCo PEP.
By zeroing out a pair, it shows how Campbell Soup trades at a price-to-earnings ratio of 20 times, yet returns on assets, a proxy for growth rate, at just 7.5 times.

“This stock could be cut in half and still be very expensive,” Bierman said, adding that it’s the same for Coca-Cola, which trades at just 10 times earnings at 24 times earnings.

“Each sector of the S&P needs to hit single digits before signaling a market bottom. There are semiconductors, oil and retail (in certain parts). Consumer staples — not even close,” Bierman told clients.

Bierman looks to one key signal for signs of these bubbles bursting, which is the “biggest Marubozo in the Consumer Staples Option Sector SPDR ETF XLP.”
We’ve seen it since September.”

What is marubozo? Through candlestick charts, which are used by technical traders and track a stock’s open and close in a day, Bierman explains. Marubozo – from the Japanese word for short-cut – a long-bodied candlestick with no shadows – is considered a strong bullish signal by sellers or buyers, depending on whether it is pointing up or down.

Here is a chart showing the candle going down:

Bierman/TheoTrade

“On a risk/reward basis, the biggest opportunity to short on Wall Street is consumer staples. This is the beginning of a long-term disruption of consumer staples.”

Note that Bierman made three big moves for the S&P 500 in 2022.

In December 2021, he predicted a 20% decline for the S&P 500 to 3,900 within six months, reaching 3,930 in early May. Last June, he predicted a rally and a recovery to 4,300 – reaching 4,315 by mid-August. Speaking to MarketWatch on August 25, Bierman predicted a retest of around 3,600 for the index, which closed last September at a new 2022 low of 3,585.

Markets

Shares DJIA

SPX
The Nasdaq Composite opened slightly higher, led by COMP,
thanks to gains for heavyweights Alphabet and Netflix. 10- BX:TMUBMUSD10Y
and 2-year Treasury yields BX:TMUBMUSD02Y
up after hitting a near 4-month low on Thursday. Dollar DXY
oil prices rise along with CL

BRN00,
both set for the winning week.

Bitcoin BTCUSD
rose slightly and remains slightly below $21,000. In the latest crypto domino price crash, lender Genesis has filed for bankruptcy, saying it owes up to $10 billion.

Buzz

Google parent Alphabet Inc. GOOGLE
announced that it would cut 12,000 jobs worldwide, or 6% of its workforce, joining the ranks of other big tech names cutting staff. Stocks are rising.

Netflix NFLX
Shares are rising after the streaming-video giant said it added 7.7 million subscribers, and founder Reed Hastings will move to executive chairman and a new co-founder has been named.

Feedback: Netflix co-founder Reed Hastings showed Silicon Valley the right way to lead

Ericsson SE: ERIC

SE: ERIC

ERIC
Shares fell after the Swedish telecoms equipment maker warned of an uncertain near-term outlook and reported disappointing profit amid weak orders. Shares of rival Nokia NOK

FI: NOKIA
are also low.

Next week we’ll hear from a big blue chip group, including Microsoft MSFT,
3M MMM,
Tesla TSLA,
Boeing BA,
McDonald’s MCD,
Intel INTC
and more.

Genius Group GNS
The stock is up another 150% after a 200% surge on Thursday, a day after the Singapore-based education company appointed a former FBI official to investigate illegal trading in its shares.

Off Bed Bath and BBBY
received a delisting notice from Nasdaq, which said it had not yet filed its 10-Q quarterly report with the Securities and Exchange Commission. The stock is low.

Costco Wholesale Costs
the board reauthorized a share buyback program of up to $4 billion. Stock up.

T-Mobile USA TMUS
said the cyberattack exposed limited personal information of about 37 million customers, but not the “most sensitive kind.”

Philadelphia Fed President Patrick Harker will speak at 9 a.m., followed by existing home sales and then a statement by Fed Governor Christopher Waller.

Read: Redfin says San Francisco home prices are down 10% — and prices are falling in those cities, too

The best of the web

In addition to selling cookies, Girl Scouts plan to roll women into dough throughout their lives

Prominent New Zealand politicians say “constant defamation”, abuse and personal attacks led to burnout and the resignation of Prime Minister Jacinda Ardern.

Horrifying scenes in a Philadelphia neighborhood show drug addicts stumbling upon a takeover of a new popular and dangerous drug.

Graph

Popular meme stock — Bed Bath & Beyond BBBY
— is becoming less popular among retail investors, according to this chart from Vanda Research.

Wanda Research

“Given the continued weak investor sentiment and weakening macro backdrop, it is not unusual to see sporadic short squeezes led and followed by retail investors,” said Marco Iachini, senior vice president, Giacomo Pierantoni, data and Lucas Mantle, data manager. A science analyst at Vanda Research, on a note.

“Generally speaking, unless markets enter a friendlier macro regime (gold bars or post-recession rebound), we still see any sustained meme rally as unlikely. As a result, we expect BBBY to sell off over the next few days as retail traders rush to take profits before it’s too late,” he said.

Tickers

As of 6 AM Eastern, the most searched tickers on MarketWatch are:

Ticker

Security name

TSLA

Tesla

BBBY

Bed Bath & Beyond

GNS

Group of Geniuses

GME

GameStop

AMC

AMC Entertainment

NFLX

Netflix

AAPL

apple

MULN

Mullen Car

NIO

NIO

WISA

Wisa Technologies

Reads casually

Which real estate slowdown? Joshua Tree’s iconic, mirror-walled mansion is on the market for $18 million

Treasure hunters are trying to find buried ingots, dollars and jewels that once belonged to the Islamic State.

Need to know starts early and is updated until the opening bell, but sign up here to get it delivered to your inbox once. An email version will be sent at 7:30 AM Eastern.

Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passi and economist Stephanie Kelton.



Source link