It reached a high of $197 last week, exactly what I had hoped.
But in the second reading, they made notice of the Fed's determination to need to keep raising rates in order to ensure that inflation remains down.
As a result, the day following the FOMC, we witnessed a complete 180 degree swing, with shares, particularly in Big Tech, plunging from their perch.
The recent financial performance and outlook provided by the industry heavyweights Alphabet/Google, Amazon, and Apple (NASDAQ:AMZN), as well as Apple (NASDAQ:AAPL), helped to tame the overly bullish forecasts of the FOMO crowd.
So does continuing the bulls' strategy of battling the Fed make sense? We'll soon find out, and on Friday when the jobs numbers were blown out of the water, we received a hint that my long-awaited dollar rising phase had begun (see later).
The fact that inflation is now declining and that many believe interest rates will peak this year before falling gives the bulls a clear reason to continue purchasing.
Meeting earnings expectations is becoming more difficult, as Big Tech is now demonstrating.
Also, keep in mind the adage, "When everyone thinks something is clear, it is obviously wrong."
The regulations that govern markets are different from those that govern markets for goods like food and shoes.
For instance, rising prices in finance draw more purchasers who are progressively more keen to possess a position.
The buyers are more committed the more abrupt the price increase. Rising costs discourage purchasers from looking for less expensive options for bread and shoes, and the buyers (also known as consumers) lose interest.
The majority of people in the MSM don't comprehend this and keep blaming growing prices on an imbalance of buyers and sellers. This is obviously incorrect as every exchange involves an equal number of buyers and sellers.
Prices increase because buyers are more pressing than sellers (who like higher prices when selling anyway).
In open outcry futures markets, you could tell which trades were more urgent since during a bull run, purchasers were by far the loudest (and vice versa)! The din level was a popular trading indication among floor traders.
I think the crucial day I had been waiting for came on Friday. At a time when bullish expectations have reached an excessive level,
it starts the dollar's rebound and likely ends the stock market's bear market rally. As evidence that hope triumphs over reality, I note that investment inflows into MSCI emerging markets are at historic highs.
Additionally, Bitcoin, the most speculative investment, has seen a boom in the past three weeks, rising from $17,000 to $24,000 last week, a gain of an astonishing 40%.
Additionally, Tesla, my second yardstick for speculative hysteria, has doubled in the previous four weeks!
This was at a time when the future of electric vehicles (EVs) was in doubt due to exorbitant energy prices, where filling an EV costs more than using fossil fuels, not to mention the 20% to 30% premium for purchasing one.
Yes, guys, the old speculative juices have been flowing freely with a purchasing frenzy, with FOMO serving as the primary motivator.
However, once bearish patterns in stock markets resume, they have plenty of recent bulls who will be putting pressure on prices to fall as they watch them do so.
That is how bear markets operate; they tend to deceive both bulls and bears equally.
At the October lows of the slump last year, many bulls had given up, and professionals had taken significant short positions and were net negative.
But this was the situation in which a mix of new buying and short covering drove prices higher with little to no buying pressure.
Investors began to believe that the Fed had their backs as prices increased into the new year as there was talk of slowing down the rate hikes.
And the water was secure enough to return to (we did – see Meta above).
They are now firmly convinced that inflation is an issue from the past and that rates will begin to decline, ushering in a new age of optimistic markets and new ATHs (yes, I have seen references to that forecast).
The stage is now set for the FOMO hopeful to experience yet another letdown as the "everything rally" has come to an end.
Unemployment is set to explode
It just fell to 3.5%, a multi-decade low. When the rate starts to increase, this data point has always been a sign of a coming recession (grey bars).
The following data point should be higher than 3.5% due to the enormous (ongoing) tech layoffs (unless the feds massage the numbers again, of course).
These days, a lot of top organisations have stopped hiring. This comes after the Great Resignation of the previous year, when a large number of "older" employees merely resigned their positions and retired early.
I anticipate that process to reverse this year as cost-of-living increases have a negative effect on household budgets.
Even while the inflation rate for consumer goods may be decreasing at the moment, prices are still rising at an unsustainable rate.
Given the skyrocketing cost of flight, this may be the final year that family summer vacations overseas are a given.
The recent surge in risk-taking is quickly changing into a lot more cautious approach than it was the previous year.
As I look over the cliff, the bear market relief rallies are soon to come to an end.
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