[Analysis] Pre Fomc analysis on S&P500. The audacity!
S&P500 is now back at 3900. This price is ABOVE the last FOMC level. The audacity and arrogance of the bulls!
This begs the question,
"Was there anything that occurs during last Fomc and now that justifies this rally?"
None.
Tech earnings were abysmal
Apple and Netflix rallied on earnings but, the result was pretty bad.
Recall that we call bullshit earnings on Apple's last earnings as well. But Apple rallies on that earning before crashing down big down.
We also call bullshit on Meta's earnings in April, when it gaped up 20%. Eventually, Meta crashed big time.
The unemployment rate going down is bad for fighting inflation
Oct CPI is still heading up, especially the core CPI.
Rallies on earnings do not mean it is good earnings.
Likewise, rallies before FOMC does not necessarily mean Fed Pivot.
It is dangerous to rally into FOMC when the rally has no justifiable reason.
This works the opposite as well.
We were bullish on market before Oct's CPI because the market crashed too hard into the CPI date.
Be very careful not to get too arrogant with the current rally.
Most folks are calling bottom base on technicals and then sprinkling some random "fundamentals" to justify their technical views.
It should be the other way around.
The bottom should be called using Fundamentals and then double check with technicals to see if it aligns.
We are going into this FOMC with a neutral portfolio (Long/short strategy). While we are still bear based on fundamentals, as the techniques do not align, we will not be shorting into the FOMC.
This begs the question,
"Was there anything that occurs during last Fomc and now that justifies this rally?"
None.
Tech earnings were abysmal
Apple and Netflix rallied on earnings but, the result was pretty bad.
Recall that we call bullshit earnings on Apple's last earnings as well. But Apple rallies on that earning before crashing down big down.
We also call bullshit on Meta's earnings in April, when it gaped up 20%. Eventually, Meta crashed big time.
The unemployment rate going down is bad for fighting inflation
Oct CPI is still heading up, especially the core CPI.
Rallies on earnings do not mean it is good earnings.
Likewise, rallies before FOMC does not necessarily mean Fed Pivot.
It is dangerous to rally into FOMC when the rally has no justifiable reason.
This works the opposite as well.
We were bullish on market before Oct's CPI because the market crashed too hard into the CPI date.
Be very careful not to get too arrogant with the current rally.
Most folks are calling bottom base on technicals and then sprinkling some random "fundamentals" to justify their technical views.
It should be the other way around.
The bottom should be called using Fundamentals and then double check with technicals to see if it aligns.
We are going into this FOMC with a neutral portfolio (Long/short strategy). While we are still bear based on fundamentals, as the techniques do not align, we will not be shorting into the FOMC.