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Happy Weekend, traders.
After our huge reaction to the CPI print (which I don’t often try to predict), the indices have stalled and are presently producing some initial bearish structure:
As I’ve already discussed in the last weeks, while it is possible that markets are genuinely very bullish (given the strong rally we’ve seen this month), I am still more inclined to expect this rally to fail. I think we’ve had more than enough time for the lag effects of the extremely harsh Fed hiking cycle to begin to affect the economy, and I think lower prices are the more probable outcome. I also do not like the low we made in late October. We didn’t get my puts, we didn’t get an accumulation. I don’t like it one bit.
What we’d like to see after this sharp rally and all of its short-covering is hopefully a pattern of distribution. For that, I still have the same two things to say that I did yesterday.
So, we’ll see what happens here next week. This all seems to me to be just another bear market rally. I hope everyone has a fine weekend and I look forward to seeing you next week (or during the weekend if you’re in Discord and would like to chat).