Nasdaq Composite: sell the rumor, BUY the news!

5 Mei 2022

The investors have been panicking about rate hike, Russian war, oil price, inflation and recession for a couple of months. Recently the traditional 'collapse after rate hike' has become 'panic before rate hike, rally after rate hike'. This is because the fed has been more communicative about the rate hike, and the market is full of investors who try to be the fastest and often overreact. The bond market has shown some investors are expecting a 75 bps rate hike instead of 50 or 25 bps.

This assumption is obviously ridiculous, so the investors became extremely relieved and excited after 4 May 2022 at the news of the 50 bps rate hike. The recession panic is also fading as investors realise the American economy remains strong and the Russian war or Chinese lockdown is not the end of world. This relief, coupled with the inflow of bargain hunters will send IXIC to the 0.618 resistance of 14680 and 0.786 resistance of 15354, in a matter of weeks. Then IXIC will probably consolidate between 14680 and 16212 for a while, and collapse again in September. Investors consider October as the worst month because they can't forget the disasters of October in 1929 and 2008. Therefore they tend to sell in September to avoid the perceived October disaster, making September an actually worse month than October.

This pattern will combine with another wave of recession panic about rate hike and quantitative tightening, making September, October and possibly the first three and half weeks of November the bearish months of 2022. The long term trend remains strongly bullish as I have stated multiple times since 2019, so every major correction is an excellent opportunity to buy at discount.

6 Mei 2022

Catatan

WSJ Updated May 5, 2022 6:08 pm ET : “We struggle to see who is going to be a massive buyer of equities in the next couple weeks,” said Viraj Patel, global macro strategist at Vanda Research. “It’s a waiting game for that catalyst…You need more conviction from the data, either to show that inflation has topped out or the economy is slowing and that the Fed won’t need to be as aggressive.”

This analyst clearly doesn't know what he's talking about. Stocks collapse when investors panic, stocks rally when they stock panicking. Now that the recession and rate hike narrative is going down, inflation itself is not powerful enough to bring IXIC lower. IXIC will keep going up in the next couple of weeks.

6 Mei 2022

Catatan

stop panicking, lol