The peak in inflation expectations and the peak in monetary policy tightening expectations has been reached. But, stagflation is starting to show in the corporate earnings, and will likely start showing up in the expected economic data – this is not priced-in in the stock market. The pricing of the stagfaltionary effect on corporate earnings is within the context of the low liquidity, which is adding to oversized selloffs.

Yet, S&P500 is still holding the 3840 level (20% bear market threshold), with the range resistance at 4100. Short term outlook on S&P500 is neutral within this range. The resistance breakout could lead to the bear market rally, while the support breakdown could lead to the bear market continuation with the 3400 level target.

The long-term outlook is still bearish – the Fed induced recessionary bear market. Read the full report.

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