“S&P500 Monthly Head & Shoulders, Tech Stock/Cannabis Bubble” by trader Malfury — published October 13, 2018 — TradingView

Tech stocks and Cannabis have been seeing massive growth over the past few months. Because of Trumps Tax Cuts and Jobs Act of 2017 tech companies have bigger profit margins, they reinvest their profits in Company Share Buybacks, job growth hasn’t increased much. The problem is this has caused a massive BOOM in the market this year, we are seeing exponential growth in FAANGs and other Tech Companies. Venture Capital firms are betting Millions and Billions of dollars to new Tech Startups (Unicorn Startups) https://www.inc.com/business-insider/companies-startups-unicorn-1-billion-valuation-record-time.html, believing they have the potential to be the next Amazon/Netflix with these companies having very little to zero profits and actually operating on losses.

The biggest reason that the SP:SPX             , NASDAQ:IXIC             , and DJ:DJI             have DROPPED is because companies that have been buying back their own shares, with this recent October Blackout fear has slowly started creeping in as companies cannot buyback their own shares for a few days before quarterly earnings . This massively decreased volume of an already overextended US Equities market https://www.wsj.com/articles/buyback-blackout-to-test-u-s-stock-market-1537272000 if these companies don’t have big profits/earnings this holiday season. They will need to sell their shares flooding the market.

“Buybacks have been one of the big stories supporting the market this year. DataTrek estimates that in the last 12 months, the companies in the S&P 500             have purchased $646 billion of their own stock, 29 percent more than the previous 12 months. And there’s plenty of “dry powder” left. One firm estimates at least $350 billion of buybacks that have been planned for the year and are just waiting to be put to work.

And no, it is not just Apple             that is buying its own stock. More than 300 large-cap companies have active buyback programs.”

There are many more indicators such as the Fear & Greed Index showing that the market is turning for the worst https://money.cnn.com/data/fear-and-greed/. The CBOE:VIX             has also signaled from Fear in Oct 5th to Extreme Fear today.

Cannabis Bubble is also coming to an end, we’ve all seen what NASDAQ:TLRY             , NYSE:CGC             , OTC:ACBFF             , NYSE:PM             . All investments in these companies is Hype driven, “$12 billion valuation for Tilray             stock makes no sense, since the company is slated to generate less than $160 million of revenue next year. Even though the cannabis market will be huge, the current valuation of Tilray             stock is premature and overly optimistic”.

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