What Am I Missing?
In 2022: The market has sold off so much. 4 out of 5 analysts were calling for a recession in Europe and America. The Chinese economy was locked down due to virus restrictions causing supply chain issues. Russian war supply chain issues were apparent as well. Inflation was skyrocketing and there was no end in sight. This sent Treasury yields and the Dollar Index skyrocketing as the Fed was fighting inflation. Basically everything looked very bearish for equities last year. A lot of very bearish sentiment was priced into the equity markets.
In 2023: Stocks are at a major relative discount. Analysts are calling for a soft landing in America and no recession in Europe. The Chinese economy is fully reopened and their equity markets are rallying. The supply chain issues caused by the Russian war have been mostly dealt with. Inflation is on an obvious downward path and the Fed is anticipated to slow rate hikes. The US dollar is falling which is lifting equities. In theory the dollar should continue to fall due to the potential change in the Bank of Japan's policy. Also, with no expected recession in Europe the European currencies should catch some upside. This will bring the dollar down further.
The are only a few things I can see at the moment that could possibly bring some negative sentiment back into the picture. A major escalation in the Russian war could affect world markets. A resurgence of inflation could cause another rate hike cycle. China closing back down will definitely hurt world markets. Major earnings deterioration due to the massive interest rate hiking regime from the Fed could cause market panic. Very bad economic data could scare investors into selling as well. Any of these instances could lead to a recession in the US.
All of these situations are possible but they have not happened yet. This year so far is looking better than all of last year. Should we feel bullish or bearish right now? Are earnings going to be terrible? Will economic data kill the markets? Will the Russian war escalate out of control? Will China close back down? What am I missing?
As always, good luck trading. Be careful and be patient. Give your investments time. Don't invest in anything you don't understand. Don't put all of your eggs in one basket. Don't listen to the hype. Don't fomo or panic into or out of trades. And just follow the trends. A trend is your friend.
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Violets : I put down earnings because I think people truly have pulled back on using quite a bit of software and definitely spending money. but I know many people that think that we actually are going into a bull market and the economy is just fine. they think the recession talk is globalist creating a recession and that the economy is much stronger than anyone is letting on. I think that interest rates are going to increase and therefore I think that's what will bring us down in 2023 for us extended amount of time. however I don't think it will be the entire year. also people think that the FED is going to introduce a federal digital currency and that that will be one of the reasons that the market will be forced to crash so that that can be introduced. just what I'm hearing
SpyderCall OP Violets : i haven't heard much about the Feds digital currency and it potential impact. Its interesting that somebody said the market needs to crash for this to happen because China introduce their digital currency. and they did this when their market crashed for almost two years straight.
as for US markets. I'm feeling bullish but not as bullish as a complete bull market in 2023. not yet at least. Based off of history earnings should be effected by rising yields. but the lag affect of interest rate increases can take a year or more to impact an economy or earnings. That is why a lot analyst are thinking only half of the year will be good. but who knows.
until i see some bad data or earnings im just going to ride the trends
Violets : Do you know of the trader called Spud?
he posted something interesting today and I'm going to post it here for you. I'm not as good of a technical trader as you are but I think you will find this interesting
Violets SpyderCall OP : this is what he said.... the guy has been trading for about 4 years but he made like a million his first year. but then he went all cash at some point in 2022. I think he trades mostly penny stocks and sometimes calls on spy and other s&p stocks.
Violets SpyderCall OP : you know it would be great if even half the year was bullish but I am so bearish it's hard for me to buy calls but I know I'm missing out. I think if I keep buying puts though I'm going to get burned even more. I thought the second half of 2023 would be bullish don't the first half but so far I am spot on wrong LOL. can't help but think the said might bring this down on February 1st or 2nd
Violets : Fed*
Silverbat : The worst of interest hike is in the 2nd half of 2023.
Wookee32 : Top business news is calling for low earnings. You know who owns the newspapers - they're already painting the picture for a more bearish market.
As usual, markets will be a some major pivot point when JAN 30 / FEB 1 comes around. FED is holding the markets hostage right now. Last quarter... looking okay pending economic data, earnings, war, etc..
SpyderCall OP Violets : he is pretty much spot on. good insight for sure. his pivot points are definitely strong technical levels
SpyderCall OP Violets : a lot of people think the market will come down with the next fed meeting. that notion has worked all of last year so this year could be the same. we still need to get to restrictive territory like the fed said. that is around 5% or more in interest rates. you may be right. I still cannot decide until I see more data
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