Looking at the pump before and after the FOMC meeting over the last week, it is definitely feeling more like a relief rally to me and less of a rebound as people are saying.
Dont get me wrong. I am still -$20k down on my portfolio of $100k but here is why i think we can go lower than March 13th low
1) This Setup feels like Late Jan-Early Feb when we hit a bottom right before the Jan FOMC on 27th and then relief rally >6-7% on SPY from 420 to 446 over the early feb period, then we started crashing again and reached a newer low right before the March 13th FOMC meeting (coincidence again?, I think not)
2) We are gonna see 5 more rate increases this year, and its definitely gonna impact earnings for high growth stocks, since now its more difficult to borrow. In 2018 we had taper tantrum in Dec , when SPY annual return was like -6% for the year. FAANGs and Banks will continue to make money, but hard to see growth stocks doing the same
3) We still have crazy inflation never seen since the 80s, serious supply chain issues, war in Europe with troop mobilization equivalent to some of the WWII battles, new variant of covid hitting again with china under lockdown and interest rates rising.
Hard to see any positive catalyst in the next 1 year
Thats why I think volatility and drilling might be back on the table around April- May.. right when earnings start show slower growth before the next FOMC happens. (Remember sell in may and go away?)
What do you think of the behavior of the market in the next few weeks?
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