8/14/2018 – A positive day with the Dow Jones up 112 points (+0.45%) and the Nasdaq up 51 points (+0.65%) 

Not much new to add to our forecast. If you would like to find out what the stock market will do next, in both price and time, based on timing and mathematical work, please Click Here. 

This might come as a shock to most bullish investors out there, but…..

Fed is no longer worried about every market hiccup, economist Lavorgna says

Perhaps lulled into a sense of complacency by a Federal Reserve that previously had seemed to attend to the market’s every hiccup, investors seem unprepared for a central bank that now thinks more hawkish medicine is in order, a veteran Fed watcher said Tuesday.

“People don’t seem to realize the Fed does not have investors’ backs,” said Joe Lavorgna, chief economist for the Americas for French investment firm Natixis.

Lavorgna has spent 20 years following the Fed for Deutsche Bank Securities and other Wall Street firms after starting his career at the New York Fed.

The biggest issue today is that most investors haven’t figured this out yet, let alone priced it into the market. Some bullish sentiment indicator are hitting historic highs and very few investors, if any, think the FED will spoil the party.

Yet, the time to worry is now. Let’s assume the above is true and the FED won’t care if the market drops 10-20% sometime in the future. In other words, they won’t jawbone the market higher as Janet Yellen has done in the past. That, in addition to tightening and taking liquidity out of the market can spark a real crisis of confidence.

Throw in the following chart and we possibly have an explosive situation on our hands.

In other words, if the FED refuses to support the market, even verbally, a 10-20% loss in the market can very quickly turn into a 60-40% loss. What’s worse, such a bloodbath will only take us back to the mean in terms of historic valuations levels. Bears rejoice? 

Our work is clear in terms of identifying what the stock market will do next. If you would like to find out what the future holds, in both price and time, please Click Here