The market was doing quite well last week, and we opened the week with a pullback due to simple overbought positions on Tuesday. THEN comments by Jamie Dimon the Chairman of JP Morgan warning of the hurricane out there which had the same effect of the blunt force trauma to the side of the head. Markets fell off sharply.
Not to be outdone, at the same conference Bank of America Chairman Brian Moynahan posited that we get hurricanes every year.
Of course everyone is referring to the the fact that the Fed is just in the beginning stages of rate hikes and at the same time shrinking their balance sheet. By draining $95 billion of liquidity per month it will put the brakes on the economy pretty quickly.
The market is hoping against all hope for a soft landing, meaning getting rid of inflation without causing a recession. It is this hope that is causing all of the market volatility of late. The market has already gone into bearish mode and the rallies from that have been very large and exciting.
Focus on sectors that are performing best and augment a very low volatility option with those sectors. There is not time or space for being a hero. Most sectors are still in distribution