Panic selling among retail investors continues to overwhelm the institutional investors who continue to hold. 

The Fed was the culprit again, as usual. The rate increase was expected, but what retail investors reacted to was Fed’s comments that more increases are on the way, well into 2023, and perhaps no rate decreases in 2023 after all. The resultant concern is that near-term prospects for businesses look bleak and thus best to exit stocks now before prices get even worse – another example of panicked investors causing the very market crash they are attempting to avoid. 

Not sure what the institutions know that is keeping them holding their stocks, but they (are us) are getting hammered at the moment. This divergence of investor opinion creates market conditions that are the most challenging to measure and navigate (see Analytics, below). 

Our shorts are providing profits at the moment. Our long gains are evaporating and many becoming or extending losses – which is highly unusual. Either the institutions are wrong this time, or the emotional investors are over-reacting. Hard to tell, but this coming week may provide a clue, especially if a rally takes place. 

The indexes made history last week by finishing at/near new lows for the year, which completely erased the recent +50% rise from earlier June lows, which has never happened before. 

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