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Why The End is Near
The stock market tumbled yesterday due to the September employment report, which was more robust than expected, dashed all hopes that the Federal Reserve would come to the rescue of struggling equities with some rate cuts.
The stage has now been set for a significant stock market decline over the next several weeks.
However, it is also set up for that fall to possibly be the “final crash” of the 2022 bear market and perhaps for a solid bottom in stocks to emerge soon.
What does this mean for investors? Expect more stock market volatility in the near future – most likely weakness.
Be careful with long swing trades in my opinion.
Bullseye Trades: Best Alerts Service
Every Monday at the market open, Jeff sends you his weekly Bullseye Trade.
2022 has been AMAZING for these Bullseye Trades!
(+50% to 300% per week in my experience)
The Economic Slow Down
From what I can tell, the U.S. labor market hasn’t gotten the memo about this supposed economic slowdown.
Sure, the United States economy added 263,000 jobs in September. That’s down from the 315,000 new employment seen in August.
But it was also above the 250,000 job forecast by Wall Street, and when compared to previous years, it’s a decent number.
Usually, a booming labor market in the U.S. will generate around 100,000 to 300,000 new jobs per month.
When it’s on the higher end of that scale and adding over 200,000 positions monthly, then the labor market as a whole is considered very prosperous.
Why is this BAD NEWS?
Of course, a strong job creation number like we saw on Friday is fantastic news in normal economic times.
But we aren’t in normal times.
We’re experiencing a strange time when good news is bad news because higher interest rates are the enemy of the stock market.
The jobs report from yesterday was very good, and it is clear that interest rates will soon be increasing.
This is NOT good for stock prices.
The Federal Reserve doesn’t cut rates until job growth slows down because their ultimate goal is to achieve full employment.
The Fed has a dual mandate of wanting to maintain price stability while also ensuring that as many people are employed as possible.
Normally, the Fed would raise rates to curb inflation and lower rates when there’s high unemployment.
So, it’s not a surprise that the Fed rarely cuts rates unless the labor market crashes.
The Federal Reserve has carried out nine major rate reduction cycles in the last 50 years.
Only one of them, which took place after a labor market collapse causing less than 100,000 monthly employment additions or negative annualized job growth, occurred before that point.
In 1984, the Fed initiated a cycle of rate cuts–the only time this occurred without the labor market collapsing.
However, at that point in time, the Fed funds rate was more than double the inflation rate. Consequently, there is little similarity between 1984 and now.
In other words, the Fed doesn’t cut rates until employment opportunities are lost.
People aren’t losing their jobs as of now (great!), meaning it is highly unlikely for the Fed to even contemplate a rate cut in the near future.
The future of the stock market is definitely on everyone’s mind these days. And for good cause.
This year, stocks have had a rough time, and every attempt at recovery seems to fail. These days, many investors are despondent.
Bullseye Trades: Best Alerts Service
Every Monday at the market open, Jeff sends you his weekly Bullseye Trade.
2022 has been AMAZING for these Bullseye Trades!
(+50% to 300% per week in my experience)
What Can You Do?
Here are some of the services that have been thriving in this market.
- Lance and his ODTE spreads on SPX and SPY have averaged 2% a day for months. Often days the market is down – he will still make income. I know one guy making $500 a day on these…..no cost trial here. Here is Lance’s video on this weeks trades. All winners with 9% return on capital.
- Lightning Alerts from Jason Bond Small-cap swing trading at it’s best – learn more about it here! Jason has been trading for more than 10 years and it an expert in this field.
- Bullseye Trades from Raging Bull has been doing a great job finding winners on a regular basis and my small account went from $750 to $2000 in September thanks to these trades. You can check it out here.
Hopefully you guys found this helpful,
Russell
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