Michael Burry Is at It Again

By Vic Lederman, publisher, Chaikin AnalyticsFolks, Michael Burry just warned of a stock crash reminiscent of 2000 – again…

Regular readers will remember that I recently gave the hedge-fund legend credit for one of the many “bearish” calls he made. Of course, you’ll hopefully recall that I also said…

Some investors even joke that Burry called “20 of the past two market crashes.”

Put simply, if you make a lot of “bearish” calls – you’re bound to get a few correct.
This time, he claimed that the tech-heavy Nasdaq 100 Index is due for a “dramatic reversal.” Burry cited the recent “parabolic” surge that drove the valuations of tech stocks sky-high.

In his warning, Burry put the Nasdaq 100’s valuation at 43 times earnings. As he said, that’s far higher than the implied level of roughly 30 times.

As you can guess, Burry cited numerous other reasons investors should feel nervous.

However, Burry’s claims may not be as dire as he makes them sound…

Burry’s Strong Claims Stoke Investor Fear

Burry enjoys making bold claims with vivid imagery. I’ll list three of these quotes below…

• The Nasdaq 100 is the “scene of the bloody car crash, minutes before it happens.”
• Not selling and taking profits “is betting on one’s own ability to jump off at or near the top.”
• “History tells us that even if the party goes on for another week, month, three months or year, the resolution will be to much lower prices.”

Of course, we know the stock market doesn’t move higher in a straight line. Markets rise and fall.

But looking beyond the fearmongering headlines about this new warning, Burry’s claims that a crash will come anytime within a week to a year are too broad. And they’re meant to incite fear of losing vast amounts of wealth.

It’s almost like a weather forecaster telling viewers there will be a deadly storm sometime this summer.

Simply put, I think there’s something deeper at play here…Recommended Links:

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‘Five-Alarm Fire’ Alert: The Man Who Spotted TWO $100 Million Trades Is Back

Gabe Marshank – who made $100 million in profits TWICE by spotting this exact setup before – says the same signal is flashing again. He says the biggest gains could come to those who make one straightforward move before June 1. Instead of briefing billionaire hedge-fund owners, he’s going public (for only the second time ever). Click here now to see his urgent free presentation.You see, Burry disclosed in his warning that he holds a “significant leveraged short position” against a group of companies.

That means Burry makes money as these stocks fall. And if investors heed his warning and sell, these stocks may fall further – and faster.

I don’t think investors want to imagine their portfolios as a “bloody car crash.” It’s critical to separate emotions from the facts.

And as it stands right now, I’m not buying this call about the Nasdaq 100 falling completely off a cliff. To show you why, let’s take a deeper look in the Power Gauge…

The Power Gauge Is ‘Very Bullish’ on the Nasdaq 100

As longtime readers know, we track the Nasdaq 100 in our system through the Invesco QQQ Trust (QQQ).

Since the start of the year, this exchange-traded fund is up about 15%. That’s almost double the growth of the State Street SPDR S&P 500 Fund (SPY), which we use to measure the broad market.

Two major factors stand out to me here…

First, QQQ currently gets a “very bullish” rating in the Power Gauge. Put simply, our system still sees upside ahead for the fund.

Second, the fund’s Chaikin Money Flow is incredibly strong. In fact, just this past Monday, this measure of “smart money” buying activity on Wall Street hit its highest point in 12 months.

Take a look at the below chart of QQQ with some data from the Power Gauge…Notably, the massive smart-money support is encouraging. An immediate crash for any investment with this much smart money behind it is rare.

Folks, all this isn’t to say that QQQ – or stocks in general – won’t take a breather. Pullbacks are just part of markets. And as we all know, things can change fast. We just saw stocks take a dip yesterday.

But at first glance, the headlines about Burry’s claims might have you think a catastrophic crash in QQQ and tech stocks is right around the corner. And for now, the Power Gauge disagrees.

Good investing,

Vic Lederman

Market View

Major Indexes and Notable Sectors  # HLD:    BULLISH    NEUTRAL      BEARISHDow 30+0.16%716 7S&P 500-0.15%127254 117NASDAQ-0.85%2649 26Small Caps-0.97%552993 318Bonds-0.67% Health Care+1.96%1232 14

— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are somewhat Bullish. Major indexes are mixed.*  *  *  *

Sector Tracker

Sector movement over the last 5 daysInformation Technology+5.78%Materials+1.18%Industrials+1.13%Real Estate+0.93%Staples+0.45%Health Care+0.38%Communication+0.20%Discretionary+0.19%Financial-0.02%Utilities-2.54%Energy-3.16%*  *  *  *

Industry Focus

Aerospace & Defense827 5

Over the past 6 months, the Aerospace & Defense subsector (XAR) has outperformed the S&P 500by 6.24%. Its Power Bar ratio which measures future potential is Strong, with more Bullish than Bearish stocks. It is currently ranked #14 of 21subsectors and has moved down 2 slots over the past week.Top StocksATIATI Inc.CWCurtiss-Wright CorporationVVXV2X, Inc.*  *  *  *

Top Movers

GainersZBRA+11.44%Q+9.87%HUM+7.69%CNC+5.23%HII+4.98%LosersQCOM-11.46%INTC-6.82%SNDK-6.17%LITE-5.77%SWKS-5.45%*  *  *  *

Earnings report

Earnings SurprisesQBTS
D-Wave Quantum Inc.Q1$-0.04Beat by $0.04ONON
On Holding AGQ1$0.46Beat by $0.13BRSL
Brightstar Lottery PLCQ1$0.14Missed by $-0.04Q
Qnity Electronics, Inc.Q1$1.08Beat by $0.16RAL
Ralliant CorporationQ1$0.57Beat by $0.08*  *  *  *

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