As we have been saying, the S&P500 looks range-bound between 3800 & 4250, with below 3900 looking like an ok entry point and 4150 a good exit point. This thesis was valid yesterday and with equities flirting with 4,000 we would be waiting for another 2.5% to 3% down before placing a trading-buy. Today, Don't expect stocks to rebound from yesterday - there is not enough good news out there.

AMD said at an investor conference yesterday that they expect to take share from Intel for a few years and that the top line would grow 20%. Given $5 consensus for 2023, AMD is not expensive anymore for this type of growth.

This morning in Europe, the Stoxx600 is down -1% and the FTSE is down -0.76%. Overnight, the Nikkei 225 traded down -1.5%. I did a double-take when I read that a fire at Freeport LNG's Texas export facility was good for US Natural gas prices but bad for European gas prices. Since Natural Gas is difficult to transport, its a very regional commodity and the problems at the export facility would mean a month or more of extra natural gas domestically - thus prices dropped intially. Later in the day, domestic natural gas prices rebounded on tight inventory numbers. In the first good energy news in weeks, Shanghai is closing down 7 districts this weekend for Covid testing. Things are crazy when shutdowns are good for markets, but oil is very important right now.

Chatter about a potential Samsung acquisition sent NXPI up 4% yesterday. Yesterday was a bit scary, with a lot of stocks down -5% to -10%. CCL & Norwegian were down -9%, but they should be down: they are permanently impaired debt-laiden capital intensive companies that are vulnerable to energy & labor spikes (RCL was down -8%). One day is not a trend, but home-construction stocks held up nicely yesterday, as they should - they are too cheap and the housing market is not going anywhere - DHI, LOW, HD, MAS were all slightly positive in an otherwise rocky market - homebuilders look like they are basing.

Last year, we remember talking about how the market was having difficulty pricing many stocks. Cleveland Cliffs provides an example of the difficulty the market has had with certain names: the stock entered 2022 around $24, then dropped hard to $16 in late January, then doubled up to $33 in early April, and its now back down to $20. What a wild ride:

Amazon was down -4% to $116 yesterday: stay away, its not a buy yet. AMZN news of a slowing growth rate, over-hiring, and too much warehouse space indicates significant risk, even at these lower levels. Looking at AMZN's cash flows, its best quarter ever, the last quarter of 2020, generated $15 billion in cash. Annualzed at 30x suggests potential 50% upside in the stock, but remember, that was its best quarter ever & growth is slowing. AMZN will be a lot safer to buy at $100 or $105 - ignore at these levels.

If you are attracted to technology, stick with the winners. Winners are easy to spot: they throw off cash now, no promises, just cash now. UBER is a company that is not attractive, even at its lower price: weak management, $10 billion in debt, and its thrown off cash just one quarter in its history. Maybe if UBER executes well they can throw off $1 billion in cash and trade at 20x, but that suggests that the stock has 60% downside to $10. Of course, the bull case is that although UBER is expected to lose -$2 in 2022, estimates for 2023 are $0.70. To simpletons like us, UBER looks like a pretty mature business and we can't see how its going to swing from big losses to healthy gains in this environment. The next $10 move is likely down, not up.

Futures this morning are quiet, but they were super quiet yesterday in London trading - then boom. This is still a bear market: pick countertrading buys very carefully and pay attention to our range. Another 3% down and long countertrend trades will be a lot more attractive; its possible we get our chance later today.