Market Outlook
The market displayed real fear for the first time since the depths of the pandemic. The VIX broke above 30 last Friday. This is what we, at Evolution call the crucial point in the fear index. The price did not hold. We stated in our last piece that the Bulls will seek to bounce the market. There was the expected pause as the Fed had its meeting and results. We predict that the three-quarter hike will be the last three-quarter hike. The next meeting the Federal Reserve will lay the groundwork for smaller hikes and then, pause with no hike. This will be their blink. However, we are getting a head of ourselves.
Near-term
The shills will remind you that the market has some of its biggest rallies in November. They will "sell" their new favorite, MATANA (Microsoft, Apple, Tesla, Alphabet, Nvidia and Amazon). We feel that there will be a bounce just like the one in the first week of September. We called that one. In fact, we gave you the target at Dow, 32,500. Since the Dow fell below the June low, we feel that the bulls will only be able to reach 31,000. Then, a more likely consolidation period before forming a new low at 27,000. We see the transports break 10,000 and the S&P reach 3,300. Volume will determine a new target at that time. We say this because the bulls do not want to surrender their control of the market. They have the deeper pockets to cannibalize retail. If you look at last Friday's price action, the bulls rallied the market 30 S&P points or 300 in the Dow before the close. This aspect in price correction showed itself on Monday. The bears could not get enough sellers to breach Friday's low. If the bears manage to sell lower than Friday's low, this changes everything. Whatever the way the price action moves, volume will be the convincing tone. Whether I'm right or wrong, remember: the market is not rational.
Inflation
It is not going away any time soon. It rose 8.3% yoy in August. At the moment, the strong dollar, which touched a new high at 113, is causing havoc to the rest of the world. We may have seen low gas prices, but do not expect that to last for long. The way the dollar is trending, it appears that it will attack its all-time high at 120. This may give US consumers some inflation relief, but we still import everything. Inflation moves around. You will see it appear in your utility bill and banks will seek more fees. Speaking of the shills selling the November rally, turkey will be the most expensive ever. We mentioned global inflation due to the strength of the dollar, consider Argentina? Their interest rate spiked to 75% with inflation running at 100%. That, Dear Reader is hardship.
Danger Zones
The SPACs will be one cause for the market to form new lows. These special purchase acquisition companies are buying firms with no revenue and they are losing money. Don't fall for the meme.
Gold is also in the danger zone as long as it remains near its lows. Remember the market is not rational and the fiat people hate the precious metals.
Don't forgt China and Asian nations. Their housing problems needed government intervention to avoid a collapse.
Food insecurity is rising as more and more nations restrict food exports. Again, US consumers may not feel the pain, but the global community does.
The next item is the saddest of all. A report reveals that US retirement living standards continues to fall. It is sad enough that basic US standard of living keeps falling, but now, the elderly will suffer. According to the report, the US living standard for retirement had dropped to 18th on the world level. We see trouble everywhere. The scientists who gave us the "Doomsday Clock" also have a new report. It spells trouble with a capital "T" for Europe. When you look at the decline in the euro, you realize things are not good.
How about a leak in the underwater Nord Stream pipeline? Water geyers are happening and we already know water burns from the Cayuga River. It seems like more and more idiots are making decisions that hurt the world and pushing warlike actions.
Then, this from NASA. Shoot a rocket at a meteor to see if we can move its rotation path. At least someone was thinking if we destroy it, we get raining meteors like a buckshot. But, we ask, If moving the rotation path, are you not making it possible to collide it with another meteor? Of course, we are not scientists.
It is hard to write such scary stuff, but live in peace and love. This will make Him happy. Peace.
