SPX OutlookSPX is in a major reversal, with the FED tapering now and interest rates increasing, the market no longer deems this crazy market valuations as fair, and we are starting to see the big companies off load employees, and reduce their bills, this is a tell tale sign that the growth we saw post Covid is well and truly over, with staggering inflation worldwide, the FED have no choice but to crush the stock market, in order for the cost of living to reduce, in order to get energy prices back to a reasonable level, the FED will use rates as a mean to reduce demand.
These prices simply are unjust are were only caused by the staggering money being printed to purchase assets after the initial crash in March 2020, they got so scared the printer went brrrrrrr, they printed of trillions in order to maintain valuations and even pushed it above ATH, then it suddenly becomes a shock when Inflation is at crazy levels, the problem I have with it, is how the retail trading market whilst there would have been a small % making a good profit, in trading crypto or stocks during the bull market, how many of our fellow traders are stuck with massively negative returns right now?
What this will cause eventually is people simply selling their long positions to the market, this in turn will cause a massive mean reversion as price returns to a previous balance in the market, if we exclude covids inflation, this is right back where we started, as you can see on the VP the majority of market orders happened in this previous balance, and the deflationary steps by the fed will cause this to crash right back into this range, and their is the potential we crash below this level.
At the end of the day we have only just started feeling the pain of the inflation, I personally believe this can get a lot worse, if you were asked in March 2020, when everything stopped, Oil went negative, markets were crazy, but did the fundamentals ever suggest a massive Bull run! the only thing that did cause the bull run was inflation.
So be prepared for major sell offs in all asset classes, and I mean all! money is going to return to bonds, and we will see the collapse of US stocks, Crypto, XAU, XAG and Major global currencies, the only thing that can save them is more inflation... but inflation is like a short term high, it works but then it stops, it is a cowards way of dealing with the direct problem, eventually it has negative effects. I will attach a few charts for you to see below this one.
What will also see which will be massive is a surge of flow into the USD, When XAU is sold, when stocks are sold, when everything is bearish the money flows back into the USD, this will be a catalyst in disrupting the major currencies, EUR, GBP ect, will get squashed in this mammoth surge, which will squash growth globally.
The pain is near and it is coming to a town near you... be prepared, manage your risk.
