The Tape Is (Rapidly) Deteriorating: Markets Are Weak, Breadth Is Terrible

Deep Value Investing11.52K FollowersFollow5ShareSaveComments(2)SummaryThis week, the tape was largely dominated by the conflicts in the Middle East, which led to the unofficial closure of the Strait of Hormuz, increasing inflation fears.In my view, the recent deterioration (not a selloff yet!) is blamed on the Iran conflict. However, I argue that the weakness was already developing prior to Operation Epic Fury.I don't expect the correction in the S&P 500 to be larger than 10%, as earnings remain strong, and I believe Kevin Warsh will save the boat in June.That said, I warrant caution in the current market. I will be monitoring next week’s CPI release, with oil prices and sector breadth also at the top of my mind. stitched photography/iStock via Getty Images As I'm writing this piece in the pre-market session of March 6, it all points out that the three major U.S. benchmarks, the S&P 500, Nasdaq 100, and Dow 30, will be finishing the week in the red. Interestingly enough, all threeThis article was written byDeep Value Investing11.52K FollowersFollowSmall deep value individual investor, with a modest private investment portfolio, split approx. 50%-50% between shares and call options. I have a B.Sc. in aeronautical engineering and over 6 years of experience as an engineering consultant in the aerospace sector. The latter statement is not relevant in any way whatsoever to my investment style, but I thought to add it for self-indulgent purposes. I have a contrarian investment style, highly risky, and often dealing with illiquid options. How illiquid? Well, you can land a Jumbo on the spread and still have clearance for take-off. From time to time, I buy shares, mostly to not be categorized as a degen by my fellow investor friends, therefore the 50%-50% allocation. My timeframe tends to be between 3-24 months.I like stocks that have experienced a recent sell-off due to non-recurrent events, particularly when insiders are buying shares at the new lower price. This is how I often screen through thousands of stocks, mainly in the US, although I may own shares in banana republics. I use fundamental analysis to check the health of companies that pass through my screening process, their leverage, and then compare their financial ratios with the sector, and industry median and average. I also do professional background checks of each insider who purchased shares after the recent sell-off. I use technical analysis to optimize the entry and exit points of my positions. I mainly use multicolor lines for support and resistance levels on weekly charts. From time to time I draw trend lines, taken for granted, in multicolor patterns. Note: I tried to keep my introduction as real, and authentic as possible. I dislike empty suits, high-level BS, deep-level BS, unnecessary jargon, and self-indulgent, third-person written introductions with an air of superiority.Thanks for reading my introduction!Analyst’s Disclosure: I/we have a beneficial short position in the shares of SPY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.