Hitrun
2022-11-03

Ok

@Ultrahisham：Party pooper FOMC What happened yesterday in the markets remind me of the following analogy. Imagine a group of people having fun relaxing after an exam. All were hopeful. All felt like they had done well and all were hoping for less assignments and exams. Along comes the result announcements. Yay! Results were in line. It was expected and everyone sighs in relief! And it was further announced that exam load will probably be reduced in line with how everyone performs.More yay! Looks like there is a softening in stance and less pressure. Then comes the clanger. 'But you all must do the exams for a longerperiod.' So it means more assignments in the long run!!!! People were expecting less in total.So even if the next exam is less in load but you have to do more in total then it still means more load! Party pooper! When the market realised that, the indices $DJIA(.DJI)$, $NASDAQ(.IXIC)$and $S&P 500(.SPX)$swooned afterhaving gone up initially. Based on technicals and price actions, I am more inclined towards a more defensive posture now. The divergences are a bright spot but the FOMC seems to press the brakes too hard out of fear and we all know what happens whenyou press the brakes too hard on a speeding car. And the markets are probably pricing in a recession more likely than not now but the uncertainty is what makes them discount prices more. Better to be safe than sorry. Thats what the outperformance of the more defensive Dow relative to the more lively tech laden Nasdaq and broad market S&P seems to indicate. However, looking at the track record of the FOMC, the way they were so confident that inflation was transitory and they had to eat their words later to the extent now they are ultra hawkish gives me the vibes that they are overcompensating for that embarassment. Just how Ifeel. I just hope they don't break the economy as they dole out medicine to keep things funtional and smooth. In the meantime, I am staying cautious. Thanks for reading my commentary. Stay safe. 😊
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