Mr Market
So, we had the much anticipated pause. And so, Powell hinted that we could have another rate hike this year.
So, where’s the surprise? Ain’t these already mentioned previously? Why is the market selling off?
If we want to look at it logically, we can say that the market had been too optimistic recently and probably were pricing in a rate cut too early. We can also use statistics to back up the sell off as traditionally, Sep has been bearish, and to add on, the week after Sep’s quad witching day has mostly been red.
But if we want to look at it “illogically”, then the sell off is because Mr Market wants to, and it doesnt need a reason. More importantly, none of us can stop it.
So, where’s the surprise? Ain’t these already mentioned previously? Why is the market selling off?
If we want to look at it logically, we can say that the market had been too optimistic recently and probably were pricing in a rate cut too early. We can also use statistics to back up the sell off as traditionally, Sep has been bearish, and to add on, the week after Sep’s quad witching day has mostly been red.
But if we want to look at it “illogically”, then the sell off is because Mr Market wants to, and it doesnt need a reason. More importantly, none of us can stop it.
Just trade the trend.
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OceansWave : Interestingly, I am trying to understand why that although the interest rate hike ain’t coming until Nov, why the urgency for the sell off?
My personal view of the FOMC was pretty dovish as Powell did expressed that things are in control and performing up to expectations, which resulted in the pause…
Well my summary is that it still boils down to how news and analyst interprets it as they influence the market a lot.
All we can do is follow the trend.. not against the trend..
Cow Moo-neyOP OceansWave: You have rightfully pointed out a few things.
With regard to the part on why the urgency for the sell off, there are 2 way to look at it. First, it’s because market is forward looking, so now they are selling off ahead of the next potential rate hike. Second way to look at it is what you have mentioned, it’s how the institutions interpret the news/speech/ event. They can find all ways or reasons to fit their narrative and to trigger a sell off or a pump.
Therefore, like what you have also shared, trade with the trend - something that I always preached too.
Seraphicall : Very smart
Ixy The Cat : Fed has NOT contained inflation. Inflation kills corporate profits, so earnings take a hit. This means stock valuations need to be revised downwards. Hence sell-off now to take profit. Rate hike also hits corporate borrowing costs and hits consumer credit margins.
Cow Moo-neyOP Ixy The Cat: Good summary
Apoh Ixy The Cat: