I'm currently trading this rare opportunity. SP500 has seen a two week rally, amidst terrible news. Mondays are usually pretty bad for the stock market on average, which is why I shorted on Friday before closing. To make matters even worse, it reached All Time High, which is another reason why I think a cool down is on its way. The winter and its related consumption-holidays are approaching fast, with global supply shortages, global fuel crisis, global debt crisis, global inflation, and global political instability.
To make matters even worse yet again, the FED is going to taper the pandemic stimulus money that it's currently injecting into the market like a heroin abuser. The drug addict points to his "all time high" as a proof that he feels just fine and is on top of the world.
And if that wasn't enough, central banks all around the world are going to - one by one - raise interest rates to curb the inflation, which will in turn result in a stagnation in the economic output. You can't have a low or negative interest rate forever when inflation is running amok. What happens when you have stagnation and high inflation? Stagflation. Economy that is going down, people losing their jobs, while prices go up.
In the 70's, the sudden increase in oil prices led to stagflation, which led to a recession in the Western countries. Because transportation costs rose, producing products and getting them to shelves became more expensive and prices rose even as people were laid off. We are seeing a very similar situation again today.
Hold on to your hats, this will be a roller coaster.
To make matters even worse yet again, the FED is going to taper the pandemic stimulus money that it's currently injecting into the market like a heroin abuser. The drug addict points to his "all time high" as a proof that he feels just fine and is on top of the world.
And if that wasn't enough, central banks all around the world are going to - one by one - raise interest rates to curb the inflation, which will in turn result in a stagnation in the economic output. You can't have a low or negative interest rate forever when inflation is running amok. What happens when you have stagnation and high inflation? Stagflation. Economy that is going down, people losing their jobs, while prices go up.
In the 70's, the sudden increase in oil prices led to stagflation, which led to a recession in the Western countries. Because transportation costs rose, producing products and getting them to shelves became more expensive and prices rose even as people were laid off. We are seeing a very similar situation again today.
Hold on to your hats, this will be a roller coaster.