Three things to discuss: Number one: Morgan Stanley warns that a record U.S profit drop is coming just down yonder A profit drop that Rivals 2008. Number two: New research shows that the biggest money managers in the world are planning on offloading over 100 billion dollars worth of stock before year end. and folks, there's only about eight trading days even left in 2022. And lastly, Number three, we need to discuss some new indications and some new data that suggests that something could be Brewing underneath the surface, something that we haven't seen before I will take you through all of this in today's video.

All you have to do is buckle up and watch. Morgan Stanley Strategist Michael Wilson came out and updated the public on their current Viewpoint They expect the S P 500 to see further declines all the way down to potentially three thousand for 2023. That's a 22 drop from today's levels. Now it's worth mentioning that this analyst Mr Michael Wilson is actually the same analyst.

They came out right before the 2022 slump and said, hey, expect a massive, massive slump this year but people course laughed at him because you know what stocks only go up and Powell only print But he said last year, hey, no, Look at the different inflation data, look at what the FED has done historically when they got this inflation data and then think about what that means for valuations And he was right back then and he's coming out this time and he's saying hey, Okay, now we're moving from the inflation problem and now we're moving into the massive earnings problem for longer term context. Though, a bottom at 3 000 would take us back to levels we first achieved back in July of 2019. Which really, quite frankly I mean people are saying that he's extremely overly bearish, but this isn't that crazy out of the world bearish. I mean you're still far above coveted lows and you're tracing back to that 2019 economy that had much easier money policies and where people thought at the time we were going to have years and years of consistent growth.

But on the other hand, I mean the S P 500 is down right now, about 20 year-to-date and to project another 20 down coming into 2023 because of an earnings crisis? Well, obviously that's a disaster. A looming earnings recession by itself could be similar to what transpired in 2000 2009 said: Wilson that could spark a new stock market low that's much worse than what investors are expecting. He wrote in a note. Now this is the crucial prediction here: Morgan Stanley's team is now leaning towards its bear case forecast for earnings of 180 per share in 2023, compared with analysts expectations of 231 per share if you get 180 per share instead of 231.

Well, all of a sudden, all these companies as they report earnings well, they're going to have a ton of panic selling As analysts see their price targets or their earnings targets not met. Instead of Beats you start seeing massive, massive underperformers. That's when you get a huge rotation out of equities. Overall, you pull up the data from facts that in dark blue you can see the four 12-month earnings per share aka the predictions on where earnings are going to be.

And yes, indeed, analysts have been slowly adjusting down their expectations. but barely, they still expect calendar year 2023 to have earnings growth of 5.3 percent. This is the spite Q4 of 2022, seeing a projected earnings decline of negative 2.8 percent. So think about what they are saying here.

net in an effect. They are projecting that somehow as the massive rate hikes that we've already done and a few more are actually showing and having an effect within the economy, they are projecting that things are going to speed up and companies are going to become even more profitable. How do you go from declining 2.8 percent in the final quarter of 2022? and then all of a sudden magically in 2023, things start speeding up again. Money's flowing everywhere.

We're going from a year where rates were significantly lower for most of the year and a lot of the rate hikes we've already done this year are going to start being actually impactful next year. So to expect rate hikes to actually increase earnings, to expect tightening to actually increase profitability and money flow? To me, that's kind of like believing in. Magic The only way that I see this happening is if you get a massive massive fed pivot or some form of fiscal stimulus from Congress Which I Mean if that happened, that would be like a direct result of an earnings bludgeon that came first. But here lies the problem.

So this is the expert expectation of Wall Street right now. So if all of a sudden, you're in Q1 or Q2 or Q3 and you're not seeing these companies report an increase in profitability, some to a very, very large extent, that all of a sudden, it means that these companies are going to be reporting misses. And that means that there's going to be a massive rotation out of them. Now, the good news is that the S P 500 does tend to bottom before the trough in earnings during recessions.

However, the bad news is that we are barely in the beginning of the earnings drop and many analysts don't want to even acknowledge its existence yet. So the argument that it's factored in is very, very much not true in my opinion. Now, Charlie Why the heck is there such a discrepancy between analyst expectations and reality? My theory on why this is happening is because analysts that are analyzing individual companies have one itis. They tend to look at their specific company or at most industry, and they tend to assume that their company or industry is an outlier.

Because number one, they're executing well. or number two, maybe this year they did fine. You see this a lot with Tesla bullish analysts. They say oh, Tesla is run well and then their analysis doesn't even match in the macro headwinds coming to the economy which will affect all companies, but also Tesla And because this is done individually and people are focused on the Juanitis well, it only becomes apparent how stupid this metric is.

When you compile it all together onto a chart like this one, start realizing that, wait a second. Maybe it's not the best idea that analysts are only biased towards their individual companies. or Industries Maybe just maybe they should also factor in the macro headwinds great and all that you have perfect execution, but your profitability is still going to go down. and then the other.

Dynamic is that a lot of analysts just follow company guidance and companies give guidance very, very slowly. and they're very slow to adjust downward when they have lower and lower expectations. So if analysts are using that guidance well, they're using a very much lagging indicator. Which is another reason why you're only starting to see it slow down because you're only starting to see companies admit that things are going to get rougher and rougher now.

I Want to go ahead and move on to a massive, massive sell order that is being placed on this Market But first, a word from today's sponsor movement, today's video is brought to you by MooMoo and the now up to 20 free stocks that you can get if you sign up and deposit using our link down below. Let's be real in this market. the difference between success and failure is having reliable information and a powerful trading platform that has your back and guess what? Mumu offers you exactly that. For starters, MooMoo helps you find stocks that match your strategy with their state-of-the-art customizable screener.

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they also have a bit of a Christmas reward as well. so definitely check it out in the next couple of days. Thank you again MooMoo for the sponsorship! Now back to the content. Let's go ahead and talk about the mass of cell orders coming in the next couple of weeks.

So Benzinga just reported quote. A recent JP Morgan and Stonex Group study has revealed that the world's most prominent money managers are in the process of unloading up to a hundred billion dollars of Stocks by the end of 2022.. they cited silver and wealth funds and U.S pension plans making these massive moves with the goal of rebalancing to reduce exposures to equities and increase exposure to bonds ahead of 2023.. this reverses the trend of them actually buying equities in Q1 and Q2 Now, obviously, in a year like this one, you have a lot of both institutional investors and individual investors going and offloading shares in order to take advantage of tax loss harvesting.

That way they can use the losses to cancel out gains from maybe positions they locked in profits on during the beginning of the year. If you're somebody that bought a massive position in 2020 and sold out January of 2022, you had a huge, huge profit on that, right? So they said, okay, let's go ahead and cancel out some of the taxes that we owe on that by selling off some of our losing positions. But I'm afraid this move here is a little bit bigger than that. This move to unload and rebalance before 2023 seems to be part of a more aggressive, longer term risk tabling strategy.

It's this reduced willingness to be exposed at all to equities that I think is going to become very, very apparent in the beginning of 2023.. some specific examples of this: JP Morgan mentioned that Japan's 1.6 trillion dollar pension fund would have to sell 17 billion of equities to reach its Target asset allocation. Additionally, the 1.3 trillion Norwegian oil fund could transfer 12 billion out of stocks and into bonds and also into snowmen because it's very, very cold there during the winter. And then you go and you look at the CTA positioning here at home? Well, what are the Algos positioning for folks over at Nomura come out with certain estimates on positioning and they sometimes leak around social media now.

Usually I'll go and I'll show the leaked version of it today. I'm not going to do that I Want to respect their proprietary information? What I can show you is my interpretation and some of my conclusions. From the data that I looked at and the data in my opinion, suggests that some of the biggest selling pressure is right around the corner and will be triggered very very soon. If certain criteria is map, the estimate suggests that there is a Breaking Point somewhere around that previous support at 3 500 to 3600 which is also the year-to-date low and is all you really need to break to trigger a panic sale that takes you much much lower.

and that's also pretty basic common sense. If you're rallying from a low, you have all the sentiment traders who go and buy in thinking oh, this could be the end of the bear Market but they aren't exactly proven wrong until you get a new low right And so once you get that new low, they get gut punched and run away screaming and then you get a new level of buying holders or like. Okay, you know what, I'm not going to hold I'm going to go ahead and I'm going to panic cell and then you have all the other Algos that are going and dumping to accelerate the downtrend and accelerate the overall profitability that comes with shorting stocks at new and new lows. It's kind of like buying higher and higher highs.

Yeah, it's unsustainable in a sense, but it's also a self-fulfilling prophecy and that if something keeps breaking out out to newer and newer highs, then more and more people keep buying it. And if something keeps breaking out to lower and lower lows, well, more and more people keep selling More and more people keep shorting. more and more people keep thinking that's going to continue So Based on my interpretation of the CTA positioning, if you see this low break, you're going to see unprecedented, unprecedented selling pressure to get us to another new low. When do I think it's going to break? Well, I Honestly don't think it's going to break by the end of the year.

I Think that yes, the selling pressure that we're seeing from JP Morgan's study. Yes, I Think that is going to have a negative impact because we only have like eight trading days left. but that's still not enough to really push it down that much. I Think it's going to happen probably when you start seeing those Q4 earnings reports coming in.

That's going to be the first real major shock to analysts that we've seen. Everything else has kind of been like yeah, underperforming, quiet, slow. But this I think is going to be the first major shock. And then from a TA perspective on the overall Market I mean the S P 500 in most major indices are in the clearest down trending channel that you could possibly imagine.

I mean this is textbook Technical and Analysis 101 you have a downtrending channel where the highs and lows consistently get lower and lower and lower. And think about what chart analysis really is. At the end of the day, it's really an analysis of the evolving sentiment of participants within a market set them. it can bounce up and down, but the overall trend of sentiment is still bearish and has consistently become more and more bearish all year.

Every single time you get any sort of rebound rally, you have to see all of these people on Twitter in the media all speculating oh hey, everybody that said that the market was going to go down because of record tightening, they were all wrong because we had a few week increase like that doesn't always happen in every downtrend throughout history. Right Point though, is all those little Minor Details they're lost. When you look at an overall trend, an overall Channel sentiment can bounce up and down. But overall, the trend of sentiment is what matters.

and the trend is consistently more and more bearish. And usually before a trend like this that's this aggressive and this consistent and this long-winded before a trend like that breaks, you get a period of stagnation. A period where both the bulls and bears are at a price level where they're like, okay, wait, we're not really sure if we should sell more at this point. We're not really sure if we should buy more, so we're just going to go ahead and argue in a very, very tight range and you just kind of bounce back and forth around that bottom.

And once that's happened for a while and that debate goes on for a while, something triggers a decision. Something triggers the break out of that Channel or the continuation of the overall Channel Right now, we haven't even seen that debating period. We're just straight down. We see a market that's in an overall downtrending Channel and is just selling off from another temporary sentiment bounce.

But on the other hand, I mean once we do bottom, which will happen eventually. probably next year at some point, maybe mid next year. I Think you're going to see a lot. A lot of insane opportunities, you know.

Finn Twit posted this company heat map this morning and there's some serious deals even now with companies like Apple Microsoft Alphabet Amazon Tesla down Dozens and dozens and dozens of percentage points. There's a lot of upside once things turn around. However, there's no guarantee that these companies will get back to the their easy money policy Heights anytime soon. So if you're somebody that is considering deploying more Capital at Dips, consider that the best opportunities may very well still be ahead of us.

may very well still be a quarter or two out. Remember, companies tend to bottom about a couple months before their earnings trough. not when companies are just starting, just only starting to report missed earnings. Anyways, that gaps off today's video.

make sure to hit that ravishing like button and subscribe and share if you saw value in it. It helps out the channel quite a lot. And of course, if you want to get up to 20 free stocks and try out an excellent trading platform, make sure to check out our link to MooMoo Down Below Have a great rest of your day folks and we will see you in the next video.