Sentiment Speaks: What If They Held A Recession And No One Showed Up? - Part III

Summary

• This is a presentation of my general theories of market analysis culled from my articles and presentations throughout the years.
• Clearly, I'm a big believer in market sentiment as a primary driver for market direction.
• I outline my views of a recession at the end of this article.
• This idea was discussed in more depth with members of my private investing community, The Market Pinball Wizard. Learn More »

DNY59/E+ via Getty Images

The first two articles in this series can be read here:

Sentiment Speaks: What If They Held A Recession And No One Showed Up? - Part I

Sentiment Speaks: What If They Held A Recession And No One Showed Up? - Part II

Market Causality Chain In The Real World

Now, let me attempt to explain how the causality chain works in the real world based upon market psychology.

I don’t think it would come as a surprise to any of you when I repeat something that is relatively of common knowledge. A market tops on euphoria and it bottoms on pessimism.

Note that this phrase mentions nothing about earnings or the Fed. Yet, the simplicity of this statement is more accurate than most even realize. Let’s explore it a bit.

I think many recognize that when investors are “all-in” to the market, there's no one left to buy, therefore there's only one direction the market can go. This is how major tops are created. But I think exploring the psychology of bottoming is much more instructive for our purposes today.

During a negative sentiment trend, clearly the market declines, and the news seems to get worse and worse. But, once the negative sentiment has run its course after reaching an extreme level, everyone that has wanted to sell has done so, as I cited Mr. Greenspan’s quote earlier, “[i]t's only when the markets are perceived to have exhausted themselves on the downside that they turn.”

So, once we reach that negative extreme in sentiment, it's time for sentiment to change direction. The main reason is simply that there's no more room for negative sentiment, and the general public then begins to subconsciously turn towards optimism. You see, once you hit a wall, it becomes clear that it is time to look in the opposite direction. Many of you will question how sentiment simply turns on its own at an extreme, and I will explain to you that many recent scientific studies have been published to explain how it occurs naturally within the limbic system within our brains.

When people begin to subconsciously turn toward optimism about their future - again, which is a subconscious – and not conscious – reaction within their limbic system, they are again willing to take risks. Now, consider for a moment what the most immediate way that the public can act on this return to optimism? The easiest and most immediate way is to buy stocks. This, my friends, is the main reason why we see the stock market lead in the opposite direction before the economy and fundamentals have turned.

In fact, historically, we know that the stock market is a leading indicator for the economy, as the market has always turned well before the economy does. This is why Elliott, whose work led to Elliott Wave theory, believed that the stock market is the best barometer of public sentiment.

But let’s explore what the same turn to optimism does to the fundamentals and the economics of the market.

When the general public subconsciously turns towards optimism, this is the point at which they are willing to take on more risks. Whereas investors immediately place money to work in the stock market, thereby having an immediate effect upon stock prices, business owners and entrepreneurs seek loans to build or expand a business, and those take time to secure.

They then put the newly acquired funds to work in their business by hiring more people or buying additional equipment, and this takes more time. With this new capacity, they are then able to provide more goods and services to the public and, ultimately, profits and earnings begin to grow - after more time has passed.

When the news of such improved earnings finally hits the market, most market participants have already seen the stock of the company move up strongly because investors effectuated their positive sentiment by buying stock well before evidence of positive fundamentals is evident within the market. This is why so many believe that stock prices present a discounted valuation of future earnings.

Clearly, there's a significant lag between a positive turn in public sentiment and the resulting positive change in the underlying fundamentals of a stock or the economy, especially relative to the more immediate stock-buying activity that comes from the same causative underlying sentiment change.

This is why I claim that market fundamentals and economics are lagging indicators relative to market sentiment. This lag is a much more plausible reason as to why the stock market is a leading indicator, as opposed to some form of investor omniscience. This also provides a plausible reason as to why earnings lag stock prices, as earnings are the last segment in the chain of a business-growth cycle.

It's also why those analysts who attempt to predict stock prices based on earnings fail so miserably at market turns. I have taken the following quotes from The Behavioral Investor, written by Daniel Crosby to outline this point:

“[C]ontrarian investor David Dreman found that most (59%) of Wall Street consensus forecasts miss their targets by gaps so large as to make the results unusable – either undershooting or overshooting the actual number by more than 15%. Further analysis by Dreman found that from 1973-1993, the nearly 80,000 estimates he looked at had a mere 1 in 170 chance of being within 5% of the actual number.

James Montier sheds some light on the difficulty of forecasting in his “Little Book of Behavioral Investing.” In 2000, the average target price of stocks was 37% above market price and they ended up 16%. In 2008, the average forecast was a 28% increase and the market fell 40%. Between 2000 and 2008, analysts failed to even get the direction right in four out of the nine years.

Finally, Michael Sandretto of Harvard and Sudhir Milkrishnamurthi of MIT looked at the one-year forecasts of 1000 companies covered most widely by analysts. They found that analysts were consistently inconsistent, missing the market by an annual rate of 31.3% on average.”

By the time earnings are affected by a change in social mood, the social mood trend has already been negative for some time, and the forecasters do not even realize it. That's why they fail so miserably at the turns. And this is also why economists fail as well – the social mood has shifted well before they see evidence of it in their "indicators."

Economic Theory Fails To Explain Stock Market Moves

Even though the market rallied strongly off the March 2020 lows, economists had us classified as being in a recession until the market had almost doubled off those lows. That means the valuation of the stock market doubled before economists viewed us as having come out of a recession.

And this was not the first time we have seen such failure. After the analyst community failed to foresee the market swoon off the 2000 market top, on October 6, 2002, Paul Samuelson, a co-founder of modern economics, admitted “[w]e are at a loss for words. If nothing else, this baffling economy has defeated the vocabulary of economics.”

As an aside, it's interesting to note that Samuelson’s admission came within several days before the market bottomed and began a multi-year rally into 2007. His exasperated admission - wherein he effectively threw his hands up in the air in submission - marked a multi-year bottom at an extreme in negative market sentiment. He was being driven by market sentiment and likely did not even realize it.

But the failures of 2000 have not stood alone. There were many admissions of failure after the analyst community’s inability to also recognize the impending market meltdown which began in 2007.

In February of 2009, Paul Volker, former Fed Chairman, said regarding the economy:

“It’s broken down in the face of almost all expectation and prediction. Even the experts don’t quite know what’s going on.”

In May 2009, the Wharton Business School noted regarding the analyst community that “[i]t’s not just that they missed it, they positively denied that it would happen.”

And, finally, what will blow your mind is that in January of 2010, Eugene Fama, the father of the Efficient Market Hypothesis, told the New Yorker:

“I’d love to know more about what causes business cycles. I used to do macro-economics, but I gave up long ago. Economics is not very good at explaining swings in economic activity. We don’t know what causes recessions. We’ve never known.”

Yes, my friends, feel free to read that again. The father of EMH came out and told us that it does not work, and he gave it up long ago. Yet, it's still taught as the basis of economic theory in most colleges today.

Mr. Prechter went further in his book The Socionomic Theory of Finance as he then outlined the reasons why such analysis has been an absolute failure. Whereas the law of “supply and demand operates among rational valuers to produce equilibrium in the marketplace for utilitarian goods and services . . . [i]n finance, uncertainty about valuations by other homogenous agents induces unconscious, non-rational herding, which follows endogenously regulated fluctuations in social mood, which in turn determine financial fluctuations. This dynamic produces non-mean reverting dynamism in financial markets, not equilibrium.”

Moreover, since the efficient market hypothesis (the basis for fundamental analysis in financial markets) is an outgrowth from the world of economics, it has become quite commonly viewed as an unworkable paradigm for financial markets (as noted above) for various reasons. Understanding that an underlying assumption within economics is ceteris paribus, and an underlying assumption in the efficient market hypothesis is that all investors act rationally and with the same knowledge, you can easily understand why it is simply unworkable in financial markets.

In fact, Benoit Mandelbrot outright stated that one cannot reasonably apply an economic model to the financial markets:

“From the availability of the multifractal alternative, it follows that, today, economics and finance must be sharply distinguished . . .”

From an empirical standpoint, consider that, within economic theory, rising prices result in dropping demand, whereas rising prices in a financial market leads to rising demand. Yet, most continue to incorrectly apply the same analysis paradigm to both environments.

So, I will repeat my premise. As most of you, I started my investing career with fundamental analysis. Yet, I have abandoned it when analyzing the overall market because analyzing market sentiment has been a much more accurate lens through which to view the machinations of the stock market. And those who have followed me through the years can attest to this fact.

As Werner F.M DeBondt, Frank Garner Professor of Investment Management at the University of Wisconsin-Madison noted:

“. . . the sad but honest truth is that, despite its many insights, modern finance offers only a set of asset-pricing theories for which no empirical support exists and a set of empirical facts for which no theory exists.”

With all this being said, I want to now explain why I view fundamentals as important. Remember that market sentiment is the primary driver when we are dealing with investment products wherein mass sentiment is evident. However, this is not an absolute perspective. Rather, it's based upon a continuum of sentiment.

You see, while the SPY is an example of an investment product that presents us with the ultimate in mass sentiment, a microcap biotechnology company may be on the opposite end of that continuum of sentiment. Within the example of the microcap, sentiment can be a factor, but the fundamentals of the company are going to be the primary driver of this stock. And all products run somewhere within that continuum. The greater the mass sentiment being evident within the buying and selling of that product, the greater probability that sentiment will be the driver of price. And the reverse is true.

So, in conclusion, my ultimate goal is to push investors to do your own independent and intellectually honest assessment of everything you hear or read, while you pass it through a prism of logic and truth. Much of what you currently read in the investing world is based upon fallacious, but commonly accepted, perspectives about how the market really works. And it does not look like anything will change anytime soon. The most common reason I have heard as to why they cling to their failed methods is simply because they are unable to come up with a better model. Yes, that's the truth.

In the January 6, 2011, issue of Oxford Analytica, they explained that “[a]though the crisis has exposed serious weaknesses in the neoclassical synthesis, no alternative paradigm is likely to eclipse it in the short term. Moreover, there are strong intellectual and social pressures that work to hold the paradigm in place. . . While it may be possible to suggest revisions to this paradigm at the margins, there is little evidence that an alternative paradigm to understand the economic world is gaining widespread credibility among mainstream economists.”

When Is The Next Recession?

This brings me to the question in the title of the article – what is my perspective on the next recession?

Well, let’s start with the premise that a “recession” is a construct of economists. Therefore, we're attempting to impose an economic theory on our expectations of the stock market. And, if you did not figure this out from the discussion above, this is a failed construct if your goal is to remain profitable in the stock market.

Now, after I just presented you evidence as to why an economic perspective is ultimately meaningless to how one should approach the stock market, do you think you really have to worry about when the economists are going to determine we are in a “recession?” In fact, the market will likely have been down for several months before the economists will see evidence of a recession in their indicators.

So, of late, all we have been hearing about is the inverted yield curve and how it precedes a recession. Resultingly, I'm reading so many posts in articles that are terribly concerned that we have begun a major recession already.

They say that a little information is a dangerous thing. So, let’s try to offer a bit more information so that you are not a danger to yourself as an investor. First, there's no guarantee that an inverted yield curve will lead us into a recession. Second, consider what happened the last time we went into a recession. If I may remind you, the stock market rallied from 2200-3500 while we were in a “recession” in early 2020. And, third, a recession is only seen between 12-18 months after the curve inverts.

So, in truth, none of this changes my view of the stock market for all the reasons discussed. My view is that we have potentially begun our rally to 5500SPX, but I still need to see one more test that the bulls pass in the coming weeks to see that as a very high probability. And, once we get to that 5500SPX region I will begin to expect a recession – well before any economist.

You see, my expectation is that we will likely enter a 3-6 month pullback in the market from 5500 to 4600SPX. And once we are at least half way through that pullback, the economists will begin to stir. Once we reach the target for that pullback, I think we will likely have moved into a “recession.” But that will likely mark the bottom of that corrective pullback, and have us setting our sights on the next target thereafter – 6000SPX. Remember what happened the last time economists told us we were in a “recession?”

Housekeeping Matters

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Comments

[BigMichael]

I agree. And one must include those buyers who need to buy as a matter of course. For instance new families buying a house or obtain a new job at 22 years old or demographics.

[Daniel Dorigiola]

So it looks like we are getting closer and closer to a recession then a rally?

[Dr.DaveR]

@Daniel Dorigiola I would say so. Have to respect that Avi admitted he was incorrect in his latest article.

[GameBuzz]

@Daniel Dorigiola Recessions only happen with rising unemployment (at least since 1950, though I imagine others were the same). We aren’t close to that yet. fred.stlouisfed.org/...

[Daniel Dorigiola]

@GameBuzz that’s an interesting point. I guess that’s a huge positive that the labour force is strong

[John D. Edwards CFA]

And what if the recession does show up? GDP contracted in Q1 at -1.4%. Granted a lot of one time items such as decline in inventories and trade subtraction.

[Avi Gilburt]

@John D. Edwards CFA

Well, since the economists declared us to be in recession while the market was rocketing up 1000 points from 2200 to 3200+ in March 2020. . . do you think the market cares what economists say?

In fact, just ignore the market . . we are up 1.3% despite the news after it came out lol

[Fero.]

@John D. Edwards CFA the market will react, but with a lag. It can defy gravity only for so long, not longer.

[Avi Gilburt]

@Fero.

But, we continued on from 2200-4800 after they declared us in recession. lol

[mstrtrdr]

Looks like Avi hit it out of the park again, it appears the $SPX will hold the 4400 support level. As I stated some time back, the $SPY and $QQQ have both formed inverse head and shoulder patterns on the daily chart. If the inverse H&S patterns do play out, target prices for the $SPY would be around 500, and in the $QQQ around 420. I don't think it's going to be straight up though, it bother me that the $QQQ never reached its important support level of 339.75-340 yesterday, while the $SPY did touch it's major support at 440. We could see another dip going forward as $TLT finishes it bounce and possibly heads down to the 121.75 area. If we do see another pullback in the indices, I don't believe price will undercut yesterday's lows by much, after which a strong move higher would be expected. Once again, best of luck to all.

[gvanderslice]

@mstrtrdr its currently below 4400 is at 4390

[Samiamaustin]

@mstrtrdr - still holding my XBI. Is it possible it will reach 107 by the end of this year? You were bullish. Currently it has 4B in assets and is at a low to almost equal March 2020. Since this is an index fund, I'm accepting the fact that All significant Biotech companies are also in the toilet. Does that mean no biotech has anything good in the hopper??
Thank You, Samiamaustin

[ryry1237]

@Samiamaustin No idea on long term behavior, but I won't touch XBI until a confirmation of a higher low (potentially happening today), and a higher high (need to exceed 77.85).

[Dr.DaveR]

Why are comments off on your latest article? Hope you are doing well...like to read the voodoo you do.

[Fero.]

@DaveBest Avi said he won't be able to answer due to traveling. Thus off.

[mstrtrdr]

With the RSI 3 in the Q's quickly approaching the 10 level, we are beginning to prepare to switch from short to long in both the Q's and $SPY. The $VIX is having trouble trading above it's initial resistance level at 23.70. We're looking for the Q's to possibly bottom in the 340 area and the $SPY around 440.10. It's important to be cautious here, thus we'll be starting with 1/3 positions in both the Q's and $SPY. There's still a chance the $VIX can move higher as the 3 period RSI is only just above 80. The next important resistance level for the $VIX is 24.62 if it does break trough 23.70. We're likely getting close to a reversal higher, Avi's 4400 area for the $SPX looks like it could hold based on our internal metrics. Best of luck to all.

[Fero.]

@mstrtrdr , thank you, let's hope it does!

[KS_Rider]

@mstrtrdr How does the old saying go? From your lips to God's ears?

LT treasuries have really been pounded with the 3 period RSI under 4 if I'm looking at things correctly.

[mstrtrdr]

@KS_Rider No doubt $TLT has gotten pounded into the dirt. We're looking for the low to be in the 121.75-122.50 area. Once the price reverses a move back to 132 is possible. The best possible long scenario is for a bounce off the 122.50 support, then a lower low to 121.75 with the RSI 3 forming a higher low and a positive divergence. If that occurs then a move back to 132 becomes more likely. As an aside, the RSI 3 for individual issues can go below 1 on occasion, that's why it's important to know where the solid support levels are located when looking for an oversold reversal.

[crushface]

The market went down 54% in 2008/09! I would bet there were low readings for bullish sentiment (which is bullish) when the market was down 25%, when it was down 35%, when it was down 45%, and when it was down 54%. So, sentiment readings can work well until they don't.

[Avi Gilburt]

@crushface

That is why it is so important to understand not just the sentiment readings . . but it is more important where we are in the sentiment TREND!!

[Z-alpha Trading System]

Be cautious with the VIX®.

Just because the VIX® has dropped from a 36-handle to a 19-handle rounded on a closing basis in the last few weeks and has an etch-a-sketch chart history, it has absolutely no value when foretelling the direction of the S&P 500®. None.

We like to trade the futures on this instrument (strictly) for its daily volatility, as it's a lagging second-tier market indicator or follower, to be more specific, and this characteristic delivers opportunity.

The machines also like to exploit this characteristic of the VIX® in their low-hanging fruit subroutines.

The only indicator that we follow for foretelling the direction of the primary indices is term structure order flow.

We hope this adds value.

[mstrtrdr]

@Z-alpha Trading System Sorry but I disagree 100%. I previously posted that the $VIX had very strong resistance at 24.62, it topped last week at 24.78. The $VIX trades like everything else, based on support/resistance and overbought/oversold oscillators,(we prefer to use the 3 period RSI). Because the $VIX formed a positive RSI divergence at its recent low, we expect the $VIX to move higher this week. We’ll see what happens, my group has been using the $VIX as one of our main indicators when trading index futures and index ETF’s since the early 2000’s with very positive results. Best of luck to you.

[GameBuzz]

I like the VIX indicators used by Larry McMillan — term structure, trend (over/under its 20- and 200dmas, and if one is over/under the other) and spike peaks. They are used in conjunction with his other indicators but their signals have proven quite useful and accurate over the years.

Many different ways and methodologies are available; the trick is learning and applying them properly and consistently. Obviously what you folks do works well for you and that’s what matters.

[GameBuzz]

“[C]ontrarian investor David Dreman found that most (59%) of Wall Street consensus forecasts miss their targets by gaps so large as to make the results unusable…”
Not to be confused with David Draiman, lead singer of Disturbed, who is apparently silent on the matter. www.youtube.com/...

[a.random.walk.down.wall.street]

I see it highly unlikely that VIX goes to 26 from current levels, certainly not 29 again right now but next 2 weeks will tell, it’s pretty much 50:50 imho

[Daniel Dorigiola]

How do you get to 5500? You have rates increasing and quantitative tightening, I am just trying to understand that

[Avi Gilburt]

@Daniel Dorigiola

How do you get to 4000+ when we were at 2200, and the country was starting economic lockdowns, the economists were saying we were going into recession, companies were drastically dropping their earnings estimates, we were seeing the worst of the Covid deaths rates, and we were hitting record unemployment!?!??!!?

Get my point?

[Daniel Dorigiola]

@Avi Gilburt Yes thanks Avi that makes sense. The only difference is we were going into QE not QT. This is the opposite as rates are rising now not decreasing. Wouldn't this be a bit different then?

[Avi Gilburt]

@Daniel Dorigiola

Always a wall of worry.

[wew5dfbb]

Impressive article. I think I should add EW into my decision making process. Focus on fundamental and sentiment, ignore the noise!

[mstrtrdr]

The pullback that both Avi and our group expected is presently in full swing. Due to the $VIX forming a large positive RSI 3 divergence after the 4/4 low means the $VIX will likely take the 3 period RSI above 90 and possibly to 95, presently at 82.56. There's strong resistance in the $VIX at 24.62 and then at 25.80. Once the RSI 3 breaks above 90, we will be looking to close our short index trades and switch to long. Possible targets in the Q's is the 346 area, and the $SPY in the 435-436 area. The $VIX is key here as it moves from grossly oversold to grossly overbought. Once the main indices reverse, we expect a higher high to ensue in both. Best of luck to all.

[Samiamaustin]

@mstrtrdr -- Howdy folks. Still holding XBI and bought twice when fell into the 80s. Sitting now and with great hope for 107 and Avi's YE move to 5500!
Samiamaustin

[Jamie Ellis]

@mstrtrdr
couldn't agree more, the VIX staunchly staying in the low 20's almost no matter what happens is a great tell. There is no real fear of an imminent meltdown. 340-346 of the Q's is a great entry, at least for a trade. Not sure I can see how we eventually get to 5500 on S&P per Avi unless the 10-year never gets above 3.5%... then maybe. I think the big unknown in yields is what the reduction in the FED balance sheet does to longer dated treasuries and MBS's. My main worry is what rates do to the housing market. Unprecedented wealth has been created there. I'm a huge believer in the wealth effect and the negative feedback loop that is created when those type of asset appreciations start to crumble. VIX is telling us not to worry about that... at least for now.

[Hercules7]

@Jamie Ellis Risk happens fast

[educated]

What if we had a run to 5500 and no-one showed up?

[c4dancer]

@educated If we have a run to 5500 the entire FOMO crowd will be there.

[Fero.]

@c4dancer they will be the ones to push it that high after all. We'll be selling that time, LOL.

[c4dancer]

@Fero. We'll be like those two guys hitting the sell button in Trading Places.

[DividendNow]

Wow! Information overload. Saved the best for last. I cannot thank you enough for the knowledge that your provide us with each article. Forever indebted.

[Avi Gilburt]

@JS Invest

My pleasure.

[Jim Wallingford]

Morgan Stanley: "The bear market rally is over," declared U.S. Equity Strategist Michael Wilson. The economy is headed for a sharp slowdown as a "payback in demand from last year's fiscal stimulus, demand destruction from high prices, food and energy price spikes from the war that serve as a tax and inventory builds that have now caught up to demand." Note that Wilson had similar bearish views in 2021, which he later admitted were "wrong" as U.S. benchmark indexes powered to continuous record highs.
Was he suggesting that a "bull market rally" is about to start? Probably not. I wonder how much he' was paid in 2021 to be spectacularly wrong.
Bank of America: bearish citing fundamentals and the Fed
JP Morgan: Bullish based on the strength in the US economy and solid consumer balance sheets
Avi Gilburt: Bullish based on positive sentiment.
I'm going with Avi.

[Fero.]

@Jim Wallingford even this guy seems to be lost :-)

seekingalpha.com/...

[Avi Gilburt]

@Jim Wallingford

Wilson has been bearish for 1.5 years now.

[Jim Wallingford]

@Avi Gilburt And yet no re-examination of his analytic toolbox. He's going to be right some day. He'll be saluted as a seer extraordinaire. If he still has a job, of course.

[Gladiator321]

Hey Avi, I will try hard to keep my job during the next recession ´cause my dividends won´t likely suffice to pay down my mortgage. I´m almost done with my student loan debt so that´s a positive.

[mike ekim]

look out below !!!

[Jamie Ellis]

Really really good stuff. Like you I wasted too many years of a bull market listening to analysts, watching valuations, studying various fundamentals. When I finally started to beat the market, I followed a very simply methodology to a growth and value portfolio. On the buy side, buy stocks that should be going down , but dont, ( I think Tesla) On the sell side, sell stocks that should be going up, but don't. I think it was Gartman that always says, "Buy stocks whose chart goes from the bottom left to the upper right. Sell stocks whose chart goes from the upper left to the bottom right." It is uncanny how these chart directions remain pervasive. And to your point.. stocks with the same chart pattern, whether up or down.... what do they have in common on the fundamental side? Very often, not much. You will find debt ratios, P/E's, Peg"s P/S, or any other metric all over the map.

[John D. Edwards CFA]

@Jamie Ellis depends a lot on the sectors. Energy had been in a bear market from 2014-2020 before awakening. Why? Too much production as evidenced by global inventories. That has changed dramatically. As a result the bulls have taken charge. For now. Have to keep an eye on ROIC, cap ex, inventories.

[Hercules7]

Market sentiment is always good when the Fed Funds rate is below 1%.Especially with a 7.5% CPI print . Fed Funds sets the bar for all other very short term lending , such as the margin accounts of big hedge funds, and the floating rate debt of many companies and real estate investors. Regardless of the macro economic back drop, if interest rates on the very short end are this low, while the money supply is expanded as it has in the past 2 years, do you expect borrowers not to take advantage and buy assets? If the Fed announced a emergency 150 basis point rate hike tomorrow, watch how quickly ' sentiment ' changes. Because its not about 'sentiment' . Its about mathematics and financing costs

[Avi Gilburt]

@jackc77

So, were you buying all the way down due to the Fed too?

www.elliottwavetrader.net/...