After a long period of low interest rates, experimental monetary policy, and a 4 trillion dollar central bank balance sheet, the chickens are coming home to roost.
We should expect a brief snap back and an attempt to retest the highs. It won't break above the previous all time highs of 2134.
TECHNICAL:
Close below 10 Month moving average.
MACD bearish crossover.
FUNDAMENTAL:
Earnings are set to decline for a 3rd straight quarter.
Tightening Monetary Policy: Higher rates should lead to a decline in p/e multiples, as well as slow the buybacks, M&A and other financial engineering that has driven this rally. Higher rates will also lead to higher interest expense and hurt cyclical industry (autos, staples, housing).
Strong dollar will hurt Multi national earnings.
Conclusion:
Commodities are collapsing. The crash in oil is a threat to not only the oil industry, but the lenders of the oil companies. This chart spells trouble, and the fundamentals match. Protect your portfolio with SPX SPY puts, put spreads, Covered Calls, or VIX calls.
The slide in oil is not positive. The consumer story has played out. Individual names like Kors, Lulu, Macy's are getting killed. The slide in oil is leading to credit concerns, which is then spread to regional financials, regional real estate, etc.
paulyberndt
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my question is how much of this has already been priced in as this 1/4 point raise has been buzzing around for months. Other central banks continue to print as well.. On the positive side the slide in oil gives the consumer more buying power. I am watching the NDX for clues, If that fails your thesis will be spot on