While most traders were on the edge of their seats for the Nov. CPI report on Tuesday morning and the Fed Announcement of a .50 % hike in interest rates on Wednesday afternoon, hardly anyone was prepared for the proverbial onslaught of selling that came Thursday, after Wall Street "big money" decided 24 hours later, that their greatest concern, the cost of money, would now be front and center for 2023, with interest rates to be held at current levels for a longer than shorter duration.
For the S+P 500 Index, that corresponded to a 220 point waterfall e from Tuesday morning SPX high of 4100, ( Now Bearishly" Double Topped" on the chart to Thursday afternoons low today of 3879, breaking the important Nov. Support Low at 3906 in the process.
Now you would think that "big money" might have seen some of this coming The truth of the tape shows you that they did not. They as much as anyone else were simply ambushed in their blind spot.
If anyone tells you that trading the "stock market" is the way to instant wealth, make sure you dutifully remind them of the big money "blind spot" never seen until it's too late ... just up the road a bit.
Agreed. Not sure why there’s a prevailing sentiment that the Fed was going to indicate a pivot. Few people realize that the announcement on inflation is not that inflation is shrinking but it is rising at a shrinking rate…aka we still have rising inflation. As always, I appreciate your posts.
AF_D Absolutely and thanks for making the point. Step back a bit and the reality is CPI north of 7%….3.5x the fed target. It would be lunacy to start loosening at levels this high.
AF_D
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@Alt-B We haven’t seen pain yet in the economy. I believe that reckoning must happen before we move forward. I don’t believe we can recklessly print trillions, give unprecedented handouts, and have a “soft landing”. I may be wrong but I don’t think so. Time will tell I suppose.
@AF_D, If they got inflation to 2%, the next year would be -4%... Some people think clearly, others blindly follow the past
AF_D
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@amygdalad, What surprises me is that markets are forward looking and as of a few days ago were breathing sighs of relief. I think the economic pain is still to come but the markets disagree. What am I missing or are markets mistaken?
The_Unwind
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@AF_D, At the tipping point. Pain will filter in, and become widespread as 2023 progresses. Stock market will fight it, but the goose is already cooked. 40 Year High in Inflation, will not stop on a dime. And remember this. if energy prices start rising substantially again, then all bets are off in how high inflation can and will go. Watch Gold
leonardoauer
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Wedge, Double top and lower high, good trade to test october low