Tesla, MicroStrategy, Ark ETF Need to Capitulate Before Stocks Bottom

MicroStrategy Inc., ARK Innovation exchange-traded fund, Tesla Inc. and Twitter Inc. are what I’m watching to identify the ultimate capitulation point of this cycle.

Every time there’s a panicked few days’ trading in markets, my inbox gets filled with messages asking whether we’ve seen a capitulation point that clears the way for the next bull market in stocks. The short answer is always: No. The more nuanced answer is differentiating between a capitulation point and THE capitulation point. There will be plenty of the former on the way down. Short-term traders can use them to play the powerful bear-market rallies, but they shouldn’t give long-term investors any reason to relax.

In one way, it’s highly encouraging that everyone is still obsessed about when to “buy the dip.” It shows that the cult of equity isn’t broken in the US and Europe -- there’s no fear yet that we may have seen a multi-decade peak a la Japan in 1989 or (maybe) China in 2007. On the other hand, the bear market probably won’t end until we start hearing more such gloomy prognostications.