Markets need to CRASH

Rickshaw Man

Rickshaw Man

The FOMC will keep raising rates as long as the markets remain stable. It's going to take some serious stock index losses to get them to back off. Look at the DOW is barely down 10% from its all-time high.

Food and energy have not dropped that much. Oil was back over $90.00 yesterday. Perhaps after the midterms, we will get our crash. Although seasonals may not let that happen.

At this pace, in rate increases, folks may go back to CDs and money markets. Heck alot of folks would love a risk free 6-7%
 
Dow is industrial therefore a good indication of large stable cash flow businesses. When you look at NDX, those are high growth stocks which are financed by cheap rates. SPX is mixed. As long as employment numbers are good, the rate can go up.
 
Crash is an opportunity or disaster, it depends on how much you know about stock market. Crash never comes on invitation. Stock Market works on some principles which are linked with law of nature. There are cycles of market which tells us that after a rally, correction happens. On a bigger timeframe, you know the rally is over and a deep correction is about to come, you can make billions.
 
This bear market has so far been one of the mildest in history. Notwithstanding the bearish investor surveys, there has been no panic and no blood in the streets - just a modest gentle decline off all-time bubble highs.

Psychology is still all about the pivot and finding the low, with everyone chomping at the bit to buy right back in, across all asset classes from real estate to crypto.

Here's something to consider. Interest rates are still negative in real terms. The central bank of Chile started hiking in early 2021; their rate is currently 11% but core inflation is clipping along at 14%, so real rates and negative and surprise, surprise, inflation hasn't fallen. What if market expectations of the duration and magnitude of this hiking cycle are preposterously off-base?
 
SunTrader said:
As measured from ATH 1/5/22 36,952.65 to today's low (so far) 31,727.05 Dow is down -14.14%

Not barely -10%
More...
right? NQ down 35% but not "crash" enough for OP. JPOW's doing soso, inflation's flattish but we'll have high rates for a year or so. Tomorrows non-farm payroll will give us a clue as to how hot economy still is.
 
Looking for drama when it is not there is a fools errand.

That being said, the market is vulnerable to geopolitical shock, OTH it always is, but it would start from a lower valuation than 12 months ago.

It takes a while for a huge Fed hangover to end. Patience and seeing reality is key. Don't trade on hope of a major move IMO.

Meanwhile, sitting on MCRB at 3.85 in the swing portfolio :D
 
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