Last week, we saw some nice bounce in S&P 500 after the fed rates decision, when they hiked rates by 25bps, but it looks like they are preparing to finish the hawkish cycle in the next few months. Strong jobs data reported on Friday suggests that there may not be a recession risk, especially not if they will really stop the hiking cycle.
So, that’s why equities moved nicely higher, but for final speculations on further hikes, we need to see the US CPI figures on February 14. Keep in mind that inflation in Australia and Spain,n for example, is not coming down yet, and if the US CPI would suddenly jump,p then stocks can be again on the “back foot” as Fed will most likely remain hawkish until they achieve their goal.
From an Elliott wave and sentiment perspective,e I am aware of a potential turn down on stocks, but only for a short term as VIX trades at the extremes of 2022 levels. “No fear” can actually mean that the market is too optimistic, and this causes an unexpected move. In an ideal scenario, we will see a flat correction, with wave C bottom near 3800. However, a rise above 4335 will make me think that wave C/3 is already in play.
