Powell's Caution : A Pause on The Rally. Should We Panic Sell Or Stay Calm?
πππThe Fed Chairman Jerome Powell's recent remarks calling equity prices "quite highly valued", have triggered a short term pullback especially in tech stocks. Rate cut expectations have softened and Spot Gold surged to a record high at USD 3800/oz signalling rising risk aversion.
However the rally Isn't dead.
The S&P500, Nasdaq100 and Dow all hit record highs earlier this week before retreating slightly.
Small caps and value stocks are leading the charge with small caps still trading at a 15% discount to fair value.
Oracle $Oracle(ORCL)$
What Analysts Expect :
Morgan Stanley warns of 3 underappreciated risks: labor market cooling, uneven earnings and inflation pressures, but stops short of predicting a crash.
Morningstar sees continued upside in small caps, value and sectors like energy, healthcare and communications.
The general consensus? Expect volatility not market collapse. Prepare for sector rotation, not euphoria.
Concluding Thoughts
This is the kind of moment in the markets where headlines scream caution but fundamentals whisper opportunity.
The S&P500 is still doing the heavy lifting, shedding laggards and elevating leaders. Q3 earnings are solid. The market is recalibrating, not crumbling.
The Magnificent 7 rebounded 47% from April lows. Small caps surged 7% in August, signaling early rotation. Forward P/E ratio sits at 22.6 - above average but not irrational.
Should We Panic Sell Or Stay Calm?
Panic selling is rarely the answer. Powell's Caution is not equal to a collapse. He flagged high valuations, not a systemic crisis. The Fed remains data dependent.
What Staying Calm Enables
I will continue to stay invested in $SPDR Portfolio S&P 500 ETF(SPLG)$
Investing is after all a marathon, not a sprint.
@Tiger_comments @TigerStars @Tiger_SG @CaptainTiger @TigerClub
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