The WeekendInvesting Newsletter

Freshly Brewed - Market Perspectives from WeekendInvesting Research Desk

What is your worst fear?

As an investor, the concept of a market crash can be terrifying. The thought of your carefully curated portfolio plummeting in value can be overwhelming. We’ve all witnessed the COVID crash, where the Nifty went from 12,400 to 7,500 within a short span of time. However, it’s important to understand that market crashes are not uncommon and have occurred throughout history.

One specific example is the COVID crash, which was one of the worst falls in the last five to six decades, second only to the great financial crisis in 2008. However, it is crucial to note . . .

The tail that wags the dog

The focus of this case study is the target rate for the Fed funds, which is currently set at 5.25 to 5.5 percent. At the beginning of this study, there was a 38.5 percent chance that the rate would be hiked to 5.75 percent within a month. Additionally, there was a 4 percent probability of it reaching 6 percent. The target date for these potential rate hikes was set for December 13th, 2023.

However, within a span of just 23 days, the market probabilities experienced a significant shift. The likelihood of the rate staying within its current range skyrocketed to 90.9 percent, effectively nullifying the chances of a rate hike. Furthermore, the probability of a quarter percent hike dropped from 38 percent to a mere 9 percent, with the probability of a hike by December dropping to zero. Finally, within just six days, the probability of the rate staying put reached an astonishing 99.8 percent, leaving a negligible 0.2 percent chance of any hike.

This case study clearly demonstrates . . . .

WeekendInvesting Daily Byte

The market recently attempted to break out of the 19,870 mark but failed to do so and closed slightly below yesterday’s close at 19,802. However, the overall chart remains intact for an upward trend. Currently, the market is consolidating, and once we break the neckline of the inverted head and shoulders pattern, we can expect a sharp upward movement.

Some of the stocks that have been moving hard, which are part of some WeekendInvesting portfolios. Namely, . . .

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