So if you are asking the question, what is causing the stock market to go up, this is the video that you need to watch. I Hope that you learned something new and if you do, please consider dropping a thumbs up and subscribing if you feel like we earned it without further. Ado Let me go ahead and break this down: I'm using the Weeble trading application. from the reminder, if you want to download this, it's the fifth Link in the description down below and it's free for anyone in the US One of the things that I want to talk about is NASDAQ NASDAQ From overall lows of 290 has recovered back to that resistance at 310.

this doesn't come at much of a surprise as based off of previous patterns right? Just a couple weeks ago, we saw, uh, we saw the NASDAQ market trading within the same range right around 310 to 314. we got rejected to 290. 290 has been a previous support range. We went to retest this and then we recovered.

Why Is the market beginning to recover? So the first thing is the CPI data report began to come out and the inflation report came in as expected, showing that inflation for another month is going down. This is good news, right? Because the Federal Reserve has been trying to win this fight against against inflation and bringing it down from 9.1 percent which was a 40-year high to now six percent. From the reminder, what's the goal? It's two percent. The Federal Reserve has a goal of getting inflation under control and at two percent, that is the Target That is the goal now.

I Found this article to be very interesting. So why is the market going up? The market is pricing in a 1.25 rate cut by the end of 2023.. Now I'm here to make things super simple, right? Uh, What do they mean by a rate cut? What exactly? Um, does that even mean? So I wanted to give you an example. Have you guys noticed that you know? Just last week we had an Fomc meeting and it was an interest rate hike, right? They raised interest rates 0.25 percent.

So they've been raising interest rates and I wanted to show you the previous couple of interest rate hikes have been 0.25 0.25 percent point five percent point Seven five percent point Seven five percent point Seven five percent point Seven five percent. These were very aggressive rate hikes and then point five percent and 0.25 So all of these rate hikes started last year. The reason the Federal Reserve was raised in interest rates was because inflation was at a you know, 40-year high. So because it was So High By raising interest rates, you make it more expensive for people like you and I and for businesses to borrow money.

If it's more expensive to borrow money or less, encourage or less inclined to spend more money by slowing down the economy. again, you give them. You give our money a chance to catch up with the inflation rate. The great thing about this is that well, what are they talking about when it comes down to these rate hikes? What these rate Cuts So originally right.

The reason the market went up just a couple days ago during the Fomc meeting was because originally the expectation was that the Federal Reserve was no longer going to provide any more interest rate hikes because of what's going on with you know, the banks right? Silicon Valley Bank failing. And when the Federal Reserve raises interest rates, it makes it more expensive for even Banks to borrow money. And if it makes it more expensive for banks to borrow money. And if there's this talk about potentially changing rules and regulations on banking institutions and how much they can actually be leveraged, right Meaning that they have to keep more cash on reserves for the capital that they lend out, then this means that they're going to have to be more selective with how aggressive they choose to be with future Investments Which simply just means these banks are going to be making less money, right? The more that the Federal Reserve raises interest rates, the more challenging it is for these Banks to make money.

So these rate cuts mean that the that they expect the Federal Reserve to actually cut back on these rate hikes. So what we mean by that is just like I showed you that these were interest rate hikes. They think that by the end of the year we will give back 1.25 So what that means is instead of increasing interest rates 0.25 percent, they think that again in a perfect world that by the end of 2023 from where we are now that we're going to give back 1.25 of these interest rate hikes. So this is the thing that this article says the market has all wrong and this is coming from if I'm not mistaken, an analyst from Bank of America says investors are now anticipating a more aggressive rate cut by the Federal Reserve because of what's going on with banks.

So that is why the market is going up. Originally, the market shot up right away because of what was going on with the banks. It was to be expected that the Federal Reserve even at this most recent Fomc meeting, was no longer gonna provide interest rate hikes based off of what Jerome Powell said in that meeting. He expects there to be at least one more interest rate height.

But he also stated that their plan has not changed and their fight against inflation is still very real and if economic data continues to support more interest rate hikes, then that's exactly what they will do. He supposedly said and again I Don't know if you guys believe him, but he supposedly said that the banking institutions and the banking systems are fine and running smoothly, which to me it really doesn't make sense, right? Why are we taking such a cautious approach now? because of fear of potential larger Banks failing if things are running so smoothly right? Supposedly there's going to be internal investigations with what's going on with Silicon Valley Bank and Jerome Powell Even welcomed it because they have to have a better understanding of what went wrong with Silicon Valley Bank. so it doesn't happen in the future. But if you were asking the question of what was the Catalyst What was the market expectation? What is the market factoring in this past week that is causing the market to go up? Then it all comes down to this because you will see that a number of Articles support the case that the market thinks that the Federal Reserve is going to have you heard the term pivot and that means no longer provide interest rate hikes and actually provide interest rate Cuts Meaning that they're actually going to begin to cut back on interest rates.

This will make it less expensive for people like you and I and for businesses to borrow money such as banking institutions and I'm sure some of you guys might have heard, but just this week the Federal Reserve added 94 billion dollars to their balance sheet added and last week they added 300 billion to their balance sheet. This just means that we're digging ourselves into a deeper hole. The reason I say this is that when the Federal Reserve begins to print money, it makes our money less valuable, right? Just like I showed you guys many times before when the Federal Reserve printed nearly four trillion dollars during 2020 and 2021 for all of those stimi checks. what happened? Well again, it put us into the position that we are now right.

Inflation got super high. We printed all of these stemi checks. Everyone got money. It promoted economic growth for about a year to two years and then now for about to a year to two years.

We're trying to figure a way back. But I want you to understand why the market sentiment right now which can change and I'm not here to give you like my opinion of um I think that they're wrong I'm not an analyst right? My job here on YouTube is just to take the information that I learn of what the market is, pricing in or factoring in and the reason that it's reacting the way that it is for you to have a better understanding of why. and I think that's always what's most important. it's to understand why people are doing and or markets are doing what they're doing to have and or make a more informed investment decision right? Feel free to check this out.

This is from Bazinga.com and I just found it really interesting where it clearly lays out what the market expectation is and this Bank of America analyst actually saying that he does not believe that we will be cutting rates by 1.25 by end of year. He thinks that again the Federal Reserve is going to remain very hawkish with its fight against inflation and I think he thinks people are jumping at the gun is what he thinks right? Market right now is factoring in one thing other people are preparing for. You know, the short side. The way that I would approach the market right now is do I think the market is overbought.

Yeah, kind of right. If you look at previous resistance levels, we are approaching that previous resistance level. But one of the things that I want to remind you is our job is not to predict the future. Our job is to prepare for it, right? So if we get rejected here, we're going back down to 290.

We can make money by shorting the market right. You don't have to jump the gun and enter a hopeful position in hopes that the market sells off. Just wait for confirmation and if the market begins to make new highs. then again, Market sentiment is bullish then we can go long, right? We can make money as the market goes up if we break Above This resistance level.

Let's learn to keep our investing and our trading simple. Instead of hoping for something to happen, take a step back understand that confirmation is key Market Direction is key and it makes it easier. It's still challenging, but it makes it easier to make a more informed investment decision when you allow the opportunity to present itself instead of hoping that it presents itself a big difference, right? So I Really do appreciate you guys time. If you guys have any questions, you guys know exactly where to reach out to me and that's going to be via Discord or via Instagram And that's the first or third link in the description down below.

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