The Cash Squeeze

During 2022, we’ve had one short squeeze after another.

For 2023, it could be forced liquidation in the relentless squeeze for cash.

One corporate example of the squeeze is the announcement from CarMax; they’ve suspended their stock buybacks.

This ‘buy-back halt’, theme, needs to be added to the market strategy for the coming year.

We can put that on the list right along with skipped dividends, power outages, market outages, internet cyber-attack and supply chain disruptions.

A comment below, posted in yesterday’s update from Jerrimiah Babe, opines the typical consumer’s going to carry on unabated, until the very last minute.

“I don’t believe most people will stop spending until all access to credit is exhausted. Whether it be cards, after-pay, family, theft most will continue to keep up appearances. I honestly think most could be 2 months behind on their mortgage or rent and still be spending on crap. There’s no financial responsibility or discipline anymore.”

How that may translate to the mainstream is, they continue to report ‘the consumer is strong’ until instantly, overnight, they’re not.

Possible timing for that event may be late January, or mid-February (not advice, not a recommendation).

With all that in mind, the last post identified Netflix and Target, as potential candidates for significant downside opportunity.

‘Significant’, meaning a 50% to 90% decline from current levels (not advice, not a recommendation).

Target TGT, Yearly

The year is just about over so let’s start with a very long-term view.

Two things have happened over the past three-years.

Price action has met a measured move out of the wedge as shown; then, a massive downward thrust.

It’s important to note, this year’s down-thrust, dwarfs the previous one during the -64.7%, decline of ’07 – ’09.

There’s a band of support that’s at least nine-years wide, in the vicinity of 50 – 75.

We’ll discuss that in another update.

Netflix NFLX, Yearly

Technically, Netflix is worse than target. That is, it has the potential to decline farther and faster.

NFLX, has support as well but comparatively minor in the area of 50.

It does not become significant until the wedge (blue lines) in the vicinity of 5 – 10.

With Netflix’s ‘product’ being completely discretionary, it’s ultimate downside potential, from a fundamental standpoint, surpasses that of Target.

Summary

Time permitting, shorter timeframes will be presented.

However, since the primary focus of this site, is first on ‘strategy’ (think dollar rally), we’re interested in the larger timeframes.

That in turn, provides background to drill down further for any trade decisions (not advice, not a recommendation).

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279