The overall trend for the S&P500 and NASDAQ remains down, and with that we will get some really nasty upside reversals, but absent a trend break trading for prolonged upside will likely be a losing proposition.
QQQ
SPY
Some quick thoughts before the market opens.
There is little doubt in my mind that inflation has peaked, prices are rolling over, and the FED's rate hike cycle is fast approaching its end. Perhaps with the next meeting being the last hike.
And yet the problem remains jobs. With the unemployment rate still incredibly low, with plenty of job openings, companies are still forced to pay up for labor. That is not a good sign, and until we see wages stagnate and jobs tighten up, its going to be tough to get bullish on the market.
My longer term view remains a move down to SPY $330 or even $320 before a sustainable rally can take hold. I also think many names have already bottomed, just like we saw at the end of 2008, with the stock market not bottoming until March 2009.
My thoughts have always been.. the FED fears deflation more than inflation. When they are confident inflation is returning to the norm, or perhaps the threat of an undershoot, with prices falling more swiftly than forecast, the FED won't hesitate to ease financial conditions. As always the market will sniff this out far sooner than you or I. An unexpected rally in asset prices, breaking the current down trend would be an ample sign that the market has seen a low for this bear market.
Until then we will see strong upside moves and ugly pull backs, as id 2022 is still here.