Market Insight 09/02/2016

Recently, high growth stocks have been sold off hard by hedge funds. Selling power was significantly huge in recent weeks after the market hitting new high. Even stocks with good earning beats have been suffering from the sell-offs.

Why did the sell-off occur?
– Talks about raising interest rate
– Typical new high sell-off

Before BREXIT, U.S. market was not all negative towards raising interest rate. In other words, the market translated raising rates as a confirmation of recovering U.S economy. However, as Fed officials become more hawkish and raising rates becomes more real day after another, the market fears the uncertainty,
mostly because Fed was never right about the economy for the past years.

Market is simple. More buyers than sellers would increase stock prices. More sellers than buyers would drag stocks down. Dow Jones and Nasdaq have been hitting new highs. A new high is a good position for stockholders to lock in gains.

Chart-4
(Market Q, 09/02/2016)
Chart-2
(Market Q, 09/02/2016)
Chart-3
(Market Q, 09/02/2016)

 

Everyone is saying the same – If Fed raises rate then stocks would fall, then buy at the bottom. However, where is the bottom? Would U.S. market fall as much as what everyone expects it to? Would Fed even raise rate this year?

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