S&P 500 ($SPY) sitting on the anchored VWAP. Decided to choose the starting point as the first time we hit current prices ($447). Investors are in the middle of a seesaw right now, a material movement in either direction, IMO, will decide which direction we go.
Arguments to the downside: no reason we should only be 5% off all-time highs when earnings growth peaked already, inflation still not under control, Fed full force ahead on monetary tightening, and geopolitical risks still not resolved.
Arguments to the upside: all of the downside risks are already known with strong certainty and markets are efficient so it should be priced in already. Corporates have great margins and pricing power so inflation should only hit smaller areas of the market (small and mid-caps).
Do we bounce and recover or gap down and continue lower?
My money is on lower, time will tell...
Arguments to the downside: no reason we should only be 5% off all-time highs when earnings growth peaked already, inflation still not under control, Fed full force ahead on monetary tightening, and geopolitical risks still not resolved.
Arguments to the upside: all of the downside risks are already known with strong certainty and markets are efficient so it should be priced in already. Corporates have great margins and pricing power so inflation should only hit smaller areas of the market (small and mid-caps).
Do we bounce and recover or gap down and continue lower?
My money is on lower, time will tell...