Market Recap

Dow: -7.31…
Nasdaq: -189.34… S&P: -23.42…


Dow -6.0% YTD
S&P 500 -9.2% YTD
Russell 2000 -14.0% YTD
Nasdaq  -14.7% YTD

The S&P 500 lost 0.5% on Thursday, closing lower for the third straight day as investors sold into early strength amid lingering concerns about a hawkish Fed. The Nasdaq (-1.4%) and Russell 2000 (-2.3%) posted steeper declines while the Dow  (-0.02%) closed fractionally lower.

Each of the major indices started the day with gains over 1.5% in another rebound-minded pursuit. There wasn’t any specific news that triggered the positive action, and likewise, there wasn’t a catalyst to account for the intraday turnaround lower, although it’s likely that the Fed remained a primary concern along with disappointing earnings reactions and stubborn technical factors.

The fed funds futures market started to price in the probability for five rate hikes this year following the FOMC meeting.

If January is any indication of what we can expect in 2022 then fasten your seat belts. We are very oversold and should expect a countertrend move soo, but tough to say when.

Money market mutual fund assets total $5.5 trillion. Current assets are $1 trillion greater than pre-pandemic, while rates are near 0%.  It’s gotta’ go somewhere, eventually.

There are numerous occasions where yields and stocks go up in tandem; in fact, that is the normal course of events at this stage of the cycle. However, the speed/magnitude of the rate move can be a determining factor in the equity response; the equity market does not like to be surprised. Therefore, the conclusion is that once the market digests the recalibration in Fed expectations, and the Fed signals not to expect even more than what is already priced in, the equity market will have some breathing room.

Everyone feels like they are buying highs and selling lows in this market. It ain’t easy but it will get better.

Will the bulls pull a face ripper tomorrow to squeeze and terrify the shorts over the weekend? I sold my leveraged longs today (just wasn’t feeling it), so they probably will. Right?

It would be a good time to try it.


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