Just a few days ago I wrote that major fluctuations in the North American indices were not expected in the short term, with the market being able to navigate a lateral consolidation, at least until there are reasons for investors to leave the lateral lines and decisively pull on Wall Street for any purpose on the sides. However, despite the fact that the end result is a lateral movement, volatility has skyrocketed in these last two sessions, with the S&P500 registering the worst performance of the last three months on Wednesday, due to the lack of news resulting from the FED meeting, which followed a day of recovery that cancelled out much of the pessimism.
It is true that at a time of earnings season it is normal to have some instability in the movement of the market, as a result of the diversity of results that usually exist, but in reality and these days the shock is due more to extraordinary events, such as the war between Hedge Funds and small traders, with the seconds organizing through a Reddit forum called “wallstreetbets”, attacks on short positions of major players, causing certain titles to shoot abnormally, such as GameStop, which has already resulted in the closing of positions with high losses by some large capital managers, such as Melvin Capital.
But at the end of the day the scenario remains the same and I reiterate that Wall Street will probably still have some time for lateral consolidation, which can nevertheless be sprinkled by periods of greater volatility, derived from occasional themes, but nothing fundamentally important.
