I don’t know about fairly rare…fairly rare in 2023? or going back over the post GFC period? I’ve seen an untold number from 2009 onwards
The wisest answer would be “I don’t know”. Since I’m not wise, I am comfortable putting my 2 sense in. Cents, that is. On the daily, it looks like we now have a lower high and a lower low. This is negative technically. Much of the market advance over the last couple of decades has been during declining interest rates. Higher interest rates increase debt servicing requirements over time for consumers, businesses, and governments, potentially straining budgets and thus purchasing capacity. Higher yields makes fixed income assets more competitive for investment dollars versus equities. Further, higher interest rates may affect the viability of many capital intensive alternative energy projects, suggesting relatively high energy price input into inflation may last longer than some have anticipated, perhaps including the Fed. Rather than borrowing, some publicly traded companies have decided to issue more stock, only to see their valuations punished in several cases. Current geopolitical trajectories suggest trade restrictions may increase, potentially disrupting financial, goods, and services flows. We may be in a new paradigm. Home prices are now similar to higher in many markets just before interest rates started to rise. However, with current rates, the direct or opportunity cost of a home for potential new purchasers is roughly double. A healthy real estate market is a major pillar of economic growth. A logical question to consider is the potential effect of a Fed policy change towards the accommodative. After all, we are in the third year of a Presidential election cycle and we are in a very political environment. Given the historical cycle, 2023 should be strong. Further, the holidays are just around the corner. “401k jitters causing seasonal shopping reluctance” is not a headline I’m expecting this year. However, it is my perception if the Fed soon adopts an easier monetary policy, risk taking quickly goes through the roof, causing system stability concerns. We are in a high gamma of risk taking situation due to perceived market expectations, risk complacency, and increasingly homogenized trading models. There still seems to be plenty of liquidity. In other words, the Fed has a vanishingly small needle to thread for effective inflation management with a soft landing and the odds of them hitting this is small in my opinion. Translated, there is potential for an explosive market rally even as our economy becomes increasingly unstable. In conclusion, I believe the market will see a short covering rally after a budget agreement is reached. Significant fresh buying and the durability of the rally will likely depend upon Fed encouragement. Personally, I’ll maintain a short term horizon, using VIX as a guide, for the foreseeable future.
IDK is a good answer. Personally, I expect a bit of a battle here at least for a few days. I would be surprised if it breaks decisively either way soon. We will see. What I do know is that the world as a whole is in a totally uncharted position on many fronts and dimensions. There be dragons. I am pretty sure things are not going to slow down at this point and that we are going to see some weird stuff. As a person whose first memory was the JKF assassination, I can tell you I think I lived in the most interesting period of human history to date.
I agree... but to keep things in perspective... someone born in 1855 would have said the exact same thing in 1923. That said, the finale, when it comes... pretty sure they'll get the grand prize.
Trading below the prior day range. Putting in the LOD at 13:30 or later. Moving back above the Open and closing at top of the range. I see less than 20 since 2015 (2182 trading days). Seems fairly rare to me...