Stock Market Pumped by FED

Weak FED’s Report But Market Liked It

Author

BraVoCycles Newsletter
March 20, 2025

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Today we will be covering...

  • Today, we will examine the Indian stock market ETF, INDY.

  • Yesterday, the Fed estimated 2.7% inflation this year (compared to 2.5% at and 2.1% at the previous two meetings) but said it would be a “transitory,” one-time event due to tariffs. It sees GDP growing at 1.7% this year (compared to versus 2.1% and 2% before). The Fed sees unemployment hitting 4.4% in 2025 versus its 4.3% estimate in Dec’24.

  • Overall, it was negative, but the stock market liked it. Go figure. Maybe the word “transitory” pumped the market.

  • Do not be shocked if post-FED gains are erased today/tomorrow, as the post-FED reaction is typically reversed the next day, but not always. 

Indian Stock Market - INDY

  • I think the Indian stock market is one of the most bullish in the long term.

  • However, I warned last summer that it needed to be corrected in wave 2, which is typically a deeper correction.

  • Indian stock market ETF, INDY, reached a trough and bounced.

  • The daily cycle composite suggests that a bounce may last until May, followed by another consolidation/correction.

  • Whether the pullback is all of 2 or just ((a)) of 2 is TBD. I suspect it might be the latter.

Sentiment & Technical Analysis

  • The CNN’s Fear & Greed Index 

  • Retail investors are buying this correction aggressively.

  • They have been “smart money” for the last couple of years.

  • Are they going to be “smart” this time also?

  • Eventually, the stock market is going to punish retail investors. 

  • A strict risk management is a must.

BraVoCycles on X

  • Consider following me on X (former Twitter) in addition to the newsletter, as I often post valuable information there in real time between the newsletters.

    • A falling wedge is a bullish technical pattern.

    • Breaking above the upper wedge trendline is a bullish signal.

    • Compare early 2020 and early 2025.

    • Are credit spreads going to explode?

    • If they do, it will be not positive for the stock market.

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