I think we can expect that when the market is surprised that is when we get a huge jump or sell off. With the PC ratio so high right now you would expect the AI algorithms to force people out of put positions. That should happen this week to get the market up into year end bonuses. If you haven’t watched Tepper’s interview on CNBC it was very telling. As an optimist he likes to expect good things and up markets but even he was shorting because he believes the EU when it says 3 or 4 more .5 hikes. While our FED is not forecasting as clearly it is unlikely our FED will stop while Europe raises. If we go up 4 more then Wall Street and the bond market is wrong. If the bond market is right then inflation will be here to stay. With the labor market this tight I’d lean towards believing the EU and Christine when she says she’s gonna keep tightening. That means stocks and bonds will have another 6 months of downward pressure and investors will reach a breaking point and capitulation. My prediction is China will be the catalyst for the huge drop off we are going to see in 2023. If full Covid runs it course the worlds supply chains will again be interrupted and inflation will surge a second time because of shortages. For a happy new year I’d be entering short positions after this next run up into the new year. If the market does not rise next week look out.
I think we can expect that when the market is surprised that is when we get a huge jump or sell off. With the PC ratio so high right now you would expect the AI algorithms to force people out of put positions. That should happen this week to get the market up into year end bonuses. If you haven’t watched Tepper’s interview on CNBC it was very telling. As an optimist he likes to expect good things and up markets but even he was shorting because he believes the EU when it says 3 or 4 more .5 hikes. While our FED is not forecasting as clearly it is unlikely our FED will stop while Europe raises. If we go up 4 more then Wall Street and the bond market is wrong. If the bond market is right then inflation will be here to stay. With the labor market this tight I’d lean towards believing the EU and Christine when she says she’s gonna keep tightening. That means stocks and bonds will have another 6 months of downward pressure and investors will reach a breaking point and capitulation. My prediction is China will be the catalyst for the huge drop off we are going to see in 2023. If full Covid runs it course the worlds supply chains will again be interrupted and inflation will surge a second time because of shortages. For a happy new year I’d be entering short positions after this next run up into the new year. If the market does not rise next week look out.