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Afternoon Note

Quiet Accumulation

By Charles Payne, CEO & Principal Analyst
5/16/2022 1:09 PM

Investors are nibbling today and many casting a line in the small cap pond.  The Russell 2000 has been crushed, and it is a long way from signally a turnaround, which makes it perfect for quiet accumulation.

The IWM ETF sees resistance at 180, but a move above 190 would probably spark a sense of urgency.

This is the challenge for the market overall.  Picking the bottom is dangerous, but knowing the worst is over means giving up some big gains.  But in the grand scheme of things, it’s the smartest way if you have limited funds.


All eyes are on Walmart (WMT), which reports tomorrow before the open.  Coupled with retail sales, we’ll get a better idea on consumer spending and adjustments in this period of runaway inflation.

This should benefit Walmart, and its stock, which is actually higher on the year.

The stock rallied the last time the company reported, but it traded down in six of the last eight releases. 

Still, I could only find one downgrade on the stock this year and it would have to be a huge miss to seriously selloff here.



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I still think you have to have a fair amount of cash and be nimble with these markets.  For those that say cash is trash, remember how much money Warren Buffett was sitting on coming into 2022.  It’s amazing how he let his cash pile up – I think he had too much, but now, he is in the driver’s seat. 


It’s time to turn the tables on this situation and get into the driver’s seat like Buffett, which means having to bite the bullet on names you are sure won’t come back and preparing for an eventual rebound.

We are still not forcing the issue here. 

I like the action, and I do not necessarily agree there has to be one more giant washout.  Doesn’t mean it won’t happen, but I think the market begins to rebound upon a shift in thinking about the Fed.

I never thought Powell would be as aggressive as models are saying, and as we see data point after data point miss, we’ll see estimates on hikes and degree of QT ease as well.

You know, Charles, I've proclaimed my belief, in print, as early as Sept. 21 that the Fed was way behind the curve, that inflation was going to go higher and last longer, that supply chain issues would not resolve until late 22 at the earliest. Nothing I've seen changes my opinion. I've already said the Fed will not engineer a soft landing. Part of our present inflation is caused by wage hikes that will not be reversed no matter what happens. The vast majority is caused by high energy prices that can be reversed but will not be reversed as long as the present administration is in place. I guess what I'm trying to say is unfortunately, I see lower for longer. Wish I could be more optimistic, but I can't.

Charles Haselberger on 5/16/2022 1:33:07 PM
Short-term, I'm betting short on the entire market. I've not seen any indication of a positive trend.

Jeffrey J. Riddell on 5/16/2022 4:03:34 PM

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