Did you know Fed Funds futures were baking in two to three rate hikes in 2019 late last year? The market threw a temper tantrum in protest. The Fed apologized for their wicked ways. And now the pendulum has swung way, waaaay, in the other direction.

If you haven’t look at the FedWatch tool lately, I’ve displayed it below with comments to understand better what the market expects.

Do you see what I see? The market is pricing in not one, not two, but three rate cuts by Christmas. HOLY TOLEDO.

Six months ago, Fed chair, Jerome Powell, didn’t know what a rate cut looked like. Now, he’s Edward Scissorhands. At least, that’s what the market is saying. Is Wall Street right?

Usually I’m all about the wisdom of the crowd and the efficiency of markets. Why second guess the collective wisdom of the masses? Who am I to question the smarts of the thousands, nay millions, who are likely more intelligent than me?

And yet, that’s exactly what I’m doing right now. Is the economy really that bad? Bad enough to warrant three rate cuts over the next six months? And in what universe is 4 or 5 rate cuts even a possibility?

Remember, we don’t have a ton of room to drop rates before zero comes into play. That leaves few stimulative bullets for the Fed to shoot if a legit economic downturn arises. And you want them to cut rates three times now?

These are interesting times.

Dat Bear Retracement

Bear retracements everywhere,

Do you trade them, do you dare?

What of the Fed and lower rates?

Will they help the bulls escape?

Finding a downtrend that ramped back to resistance this week is like finding hyperbole in Trump’s twitter feed. They are everywhere. And yet, the strength of the bounce should give sellers pause. We’ve seen “V”-shaped rebounds in recent years that roasted countless eager short-sellers.

SPY is popping above the 50-day moving average as I type and the previous pivot high is a pebble toss away. It seems to me that the trend is turning neutral here. That said, I’m calling this a stock picker’s market. I see bullish and bearish charts galore. It just depends on where you look. I think it’s a mistake not to let this week’s rip temper your enthusiasm for bearish bets.

Enjoy your weekend, friends!