Tuesday's aggressive selling has continued on Wednesday morning, but traders are chattering about the potential for some end-of-the-quarter markups as well as positive seasonality into the July 4 holiday. In the last 10 years, the three days in front of the July 4th holiday have been up nine times.
Seasonality of this sort is a tendency and not a certainty, and we definitely are dealing with some unusual market conditions this time.
Jerome Powell is out with some comments Wednesday morning, but he didn't provide much new insight. He continues to 'hope' that the Fed will not trigger a recession with aggressive hikes, but he commented that "we understand better how little we understand inflation," which doesn't sound very confident.
I continue to see little reason to build longer-term positions right now, but conditions are good for some sort of bounce as we head into the end of the quarter and the three-day weekend. Bounces in an environment like this are often self-fulling as traders are anxious to do something positive and are tired of the negativity of a bear market.
The danger that the action can quickly turn into a bull trap is high, so if you are playing the short-term game, make sure you manage trades very tightly.
There is a slew of individual stocks that I eventually want to buy when price action improves, but I have to battle the inclination to believe that lower prices are an "opportunity." Stocks are not like things we buy in the store, and lower prices don't necessarily mean that they are better bargains. The aim of the game is to buy when there is the best chance of sustained upside.
This is a market for very short-term trades and not for long-term accumulation.