Tinker to Evers to Chance-
More inflation leads to Higher Interest Rates Leads to Lower Stock Market
While I continue my position of shorting interest rate futures- Eurodollar, Fed
Funds, and 30 Year T-Bond- I have added a second major position in my commodity futures account- shorting NASDAQ. Recent statements by the Fed to ‘retire’ the idea that inflation is transitory and for the first time to project multiple interest rate hikes in 2022, make it difficult for institutional investors to continue to support the
American stock market at current prices . Look at the NASDAQ chart
Much institutional money pays attention to technical analysis and a drop in the March 2022 NASDAQ future to 15400 from the current closing price of 15687 could start (talking my game here) a crescendo of selling. Note that we have not seen a concentration of a small number of grossly overpriced stocks that we see today (Tesla, Facebook, Google, AMZN, NVDA, AAPL…etc…) since the Nifty Fifty that led the market down big time in 1973.
And this time the stock market is far more overpriced than when the 1973-4 bear market began.
Those of you who stay away from futures should consider buying stocks that go up when the stock market goes down such as SH or PSQ- but I stick to shorting stock market futures such as NASDAQ or the S&P.