The plunge is mirroring the projected path from my last update. I believe that the VIX, price action across various individual stock charts and indices are pointing to a possible 25% plunge in this index from here. NFLX down 20% on earnings is a prime example of it doesn't take much to reach that goal when the SPX is being driven by a few stocks i.e. AMZN, TSLA etc. Not a time to be on margin and those with dry powder will do well post the plunge. *Not financial advice.
@Ro.goudreau, It very well could! The pre-Covid highs are a natural bounce point but 2850-2900 is much stronger long term support.
kkandru
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Very interesting charting and phenomenon. I'm thinking somewhat similar while the entire sentiment is ultra bearish, market is positioning itself to price in rate hikes, consolidate and move higher after retracing insane valuations from covid crash.
My only concern is that would FED ever do monetizing the debt again in above case if markets adjust the way you said above?
Or would there be an unforeseen event such as rates rise much much faster to 4%-5% giving no chance for FED to digest and cause a crash may be coming from 30 year bond crash ??
So far FED is the only buyer of bonds and if market has to buy, they demand much more interest rates IMO.
Thx
RockDalio
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@kkandru, I do think the FED is the wild card. Many believe that they can't actually raise rates but the reality is that they have to show good faith and do so but likely will have to backtrack and not go above 1.0 to 1.5% IMO. The fiscal stimulus and monetization of debt can be reinstated any time as the market and Main Street begin to falter, although Washington politics will play a role on the appetite for fiscal stimulus with elections this year and in two years. Good luck!
kkandru
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@RockDalio, Thank you. What's timeframe do you see for the correct to manifest?
RockDalio
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@kkandru, I don't have certainty but if it continues I would say that through early March is likely. Not financial advice.