$Marathon Digital(MARA.US)$ 20 approx

$Solidion Technology(STI.US)$ off to work

$E-mini NASDAQ 100 Futures(JUN4)(NQmain.US)$ $ProShares UltraPro QQQ ETF(TQQQ.US)$  $Invesco QQQ Trust(QQQ.US)$ $NASDAQ 100 Index(.NDX.US)$
As mentioned yesterday, NDX will have to break 16450 otherwise we were going to head down to retest 15700 and possibly even 15500. If we break the 15500 lows, we may see 15200-15300 in play.
We did tried breaking it during pre market and failed. Which was a good signal to open a short position. I closed out my longs from 15800 the day before and initiated short positions and covered at 16020.
We may see NDX retracing up to 16125 today but that is not a bullish sign. It might be just a pullback before heading down to break 15700s to retest 15500 again.
Take note it is quadruple witching day today and the stock market is going to be extremely volatile. If you do not know what you are doing it is better to stay out of it and wait till next week.
As always trade safe and invest wise!
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What happened after FED's meeting?
We are currently having a sector rotation from tech growth stocks into value stocks after Wednesday's Fed policy of 3 rate hikes in 2022 instead of 2 and also speed up tapering and ending it a few months earlier than expected.
The initial taper plan was $10B for treasury securities and $5B for MBS (Mortgage Backed Securities) but now it has doubled the speed of tapering to $20B for treasury securities and $10B for MBS and tapering to end by March 2022. Which shortly after, rate hikes should come in progressively.
The reason for the fed turning hawkish and a quick shift to taper at a quicker pace and more rate hikes was due to inflation at a 40 year high. They also did not expect inflation to rise above 2% in 2021 and kept mentioning about higher inflation rate being transitory. Current inflation is at 6.8% based on the YOY report.
How did this affect the market on Thursday?
When tapering is sped up, liquidity will be tightened in the market. There will not be as much free cash to be pumped into the market to let prices rally like we have seen the last 2 years.
Interest rate hikes will also dampen valuation on growth stocks as growth stocks are priced in more to future earnings expectations. If rates rise, it will hurt those expectations. Investors will start to see bonds and value stocks that thrive in high-interest rate environments a better asset class thus making it more appealing against higher-risk growth stocks.
Small-cap stocks usually also suffer because they tend to loan more money to fund the growth of the company thus making them more sensitive towards the rate hikes.
Thus we saw the $NASDAQ 100 Index(.NDX.US)$ and $iShares Russell 2000 ETF(IWM.US)$ mostly small-cap and tech stocks falling much sharper than $Dow Jones Industrial Average(.DJI.US)$ yesterday which consist mainly of value stocks.
What to do now? Should I exit my growth holdings?
That being said, inflation and rate hikes over the long run still don't pose a huge threat to growth stocks. It is usually short-term when the rotation happens towards value stocks. So take this opportunity to find good entry points into the stocks which are undergoing the selloff.
As always, trade safe & invest wise!
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