I think fed will surprise the markets with a 0.50 rate hike at the March 15-16 meeting. I think the rate hike + a spike in bond yields will decimate the market. In panic many retail traders will get washed out and sit on the sidelines. In response, funds & whales will prop up the market on low volume to then decimate the market with shorts. They will rinse and repeat all the way down IMO
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Since China is locking down Shanghai due to Covid, the Fed may want to delay rate hikes. However, the downside on their lockdown may outweigh the upside of a rate hike delay on the market. I am still confident in the overall thesis as Spy still has a long way to go down. However, the timeline may differ as it will depend on how the new Covid wave is handled. Most likely it will either cause a quicker fall in the markets or delay the inevitable crash. Given that, it is better to buy further out and in the money options.
Why would spy drop 45 points from here? Makes no sense the economy is still strong and this year will be even better than last year. We are about to approach a bottom between 397-405
Trader_Danny_
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@biasedsenpai, why would the bottom be at 397-405 lol
biasedsenpai
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@Trader_Danny_, because we're not in a recession and just in a correction? If you really think we're going below 380 you're suggesting we've crashed and are in a recession
Trader_Danny_
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@biasedsenpai, i dont think you understood my question, i asked why is 397-405 the bottom, and qqq is past a correction and in bear territory already just so you know
biasedsenpai
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@Trader_Danny_, tech always crashes harder than the rest of the market thats irrelevant. at 397-405 we would be at the average correction range for the sp500. Also too many puts going in the money under 400 I doubt they would let them cash in.
Trader_Danny_
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@biasedsenpai, tech is a big chunk of spy so how can it be irrelevant?
dynasty2059
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If they raise rates by 50 basis points there is doubt the market would tank, but it is wishful thinking. It will not happen. They have consistently shown they will avoid shocking they market as much as possible. A surprise hike double what the market is expecting simply will not happen.