Friday, September 24, 2021

The Wall Street “sugar high”

This is the biggest conundrum in trading
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Hey There,

The narrative of this week has revolved around the Fed report on Wednesday, especially Chairman Powell's speech.

I know we've already talked about it, but this is important!

The big fear heading into Wednesday afternoon was that the Fed would announce immediate tapering efforts to combat inflation.

Those efforts would make money harder to get, which in turn would make it harder to invest, which in turn could sink the market.

But we didn't see any of that.

Instead, the Fed announced that while tapering was still a distinct possibility, it wouldn't happen immediately.

The timeline was vague, which keeps this entire uncertain environment absolutely in place.

But there's no question how the markets reacted to the news…
The good vibes got rolling yesterday, we saw a big gap up overnight, and then yesterday was one of the most bullish days in recent memory.

The Dow finished up over 500 points.

And everyone has that good feeling back again.

The problem is, the good vibes may be an illusion…
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But here's what we need to stress:

This is a "sugar high" that Wall Street is experiencing

The fundamental reality of the economy hasn't changed at all just because the Fed pushed off tapering policies a little longer.

Inflation is still real.

Product shortages are still real.

Shipping logjams are still real.

And the Christmas season is still in genuine jeopardy.

The markets have been on a pretty out-of-control positive run since around the election last year.

And as anyone knows, that bullish momentum will have to turn around eventually.

When big investors say that, it's not a scare tactic, it's a reality check.

But it's also a reminder that there's no reason to fear the bear market as long as you're prepared to handle it.

We will be. So when it comes (and it will come), don't be alarmed.

We got this!

Happy trading,

Markay Latimer

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