Oh brother, what an absolutely brutal day in the market! Well, i guess i should just say brutal if you were long on the market, if you were betting against the market you're probably stoked, regardless of if you were long or you were short. I want to in this video, do my best to explain why we saw such a downturn in not only the equities market, but also the crypto market, and then after we get through that explanation. I want to map out a couple key levels that i think all of us should be paying attention to just so we have a better game plan for at least what might play out in the market in the short term. I think all this will be very important to know as we're moving forward.

So with all that being said, let's hop right into it. As you can see here for thursday april 21st, it was absolute carnage, the overall stock market, the s p, 500 dropped 1.5 percent. The tech heavy sector, the qs dropped 2 percent and the small cap sector iwm dropped 2.26, really with the exclusion of tesla, which had a great earnings and the airlines, american and united. That also had great earnings.

A lot of the other big players were clearly in the red, but it wasn't just equities. Over the past day, bitcoin got hit, ethereum, look at just all the carnage. The bloodbath that we're seeing here so clearly, my point in bringing all this up is. It was a market-wide event now i want to get into why this happened.

We're also seeing volatility ripped the high heavens, and that makes sense, because everything was just systematically walked down all day, which is what's telling me big money. Slowly but surely throughout the entire day across all markets was just pulling the rip cord to understand why you need to look at this. You got to go back to april 12th. Consumer prices rose 8.5 in march, the cpi, the consumer price index, basically telling us that we have a 41-year high inflation rating.

That's not good, not good in the slightest and remember the people. The organization, at least in the u.s that should be in charge of this, is the federal reserve. Now they were very, very what's referred to as dovish during the rona period to kind of keep the labor market as strong as they could. Their whole goal was to keep unemployment low, and now a lot of people are saying: did you overdo it? Did you do a little bit too much? Was it policy error because, right now, the undoing of it is proving to be pretty painful pal? We are going to be raising rates getting expeditiously to more neutral than to tight policy, if appropriate.

So jerome powell spoke twice a day, one at 11 a.m and then again at 1 pm talking to imf, and it was in that latter meeting that we got a lot of commentary that was pal if you're reading the direct lines and especially in between the lines. Basically saying that the fed's about to go full-on, birdman, full-on bird woman, full-on bird people and going extremely hawkish now remember. This is all all important because you have to go hawkish to fight inflation, but it does clearly have negative side effects on the markets and i'll be explaining. Why? But let me give you some of the important information dow drops over 300 points.

Yield surge after pal signals, bigger rate hikes, starting in may the stock market reversed gains and moved lower on thursday. Following comments from the federal reserve chair, jerome powell, who signaled aggressive interest rate hikes ahead while all but confirming market expectations of a half percentage point increase at the central bank's next policy meeting in may now. First of all, remember in the last meeting they did a quarter of a percent, so they're looking to double that up in the meeting in may i'll go over when exactly that is, but before we get into it, if you're like me, you probably woke up had A little bit of fog in your brain this morning and realized what was going on in the market and everything was beautifully. Green everything was green, tesla crushed earnings, all the airlines, united american, they were up and then we had the sympathy place.

Everything was beautifully green and then very quickly about 10 minutes into the day we started to go red and then it literally just did not stop for the remainder of the day, and what this is is the big money, the big money whales started to realize the Writing on the wall from the federal reserve and said they are going hawkish and there's a reason why we have this saying: don't fight the fed now i'm gon na do my best to sum up why this is why going hawkish is so bad for the markets. Equities and crypto, so first of all, you know inflation's high and one of the tools at their disposal to fight high inflation is to raise interest rates. The reason it was at zero and then it recently went up a little bit in the last meeting. It was at zero to help with the whole economy during the rona area.

Now that that era has passed us it's time. Okay, we prompted inflation. We have to battle it, you can battle it by raising interest rates that helps bring inflation down but understand. There are very important side effects that we're seeing play out in real time functionally.

This makes money more expensive when money is more expensive. That means that businesses have a more difficult time getting their hands on more money with less money. That means they can inject less into the business, which is essentially hampering growth. Now that growth is hampered, obviously you're going to see that play out in the market.

So, basically, you have traders and investors alike, kind of front running this phenomena and saying okay, like they're not going to be growing as much as they did. Hence you're starting to see a sell-off, as people are going to a little bit more of a risk off investment for their vehicle as in their money. Now i have a couple other things to say because that's one thing you could do you could raise interest rates, but then there's another one about other policy related to qt, also known as quantitative tightening, but before we get to that the views of the fed officials From across the policy, spectrum remain relatively unanimous about the next several meetings. That is especially true for may we're a 50 basis, point hike and the start of the balance sheet reduction are nearly guaranteed, but also the june meeting, where the fed could very well hike by another 50 basis points understand in about the time frame of eight months.

We have gone from a monetary policy concept of we're not doing interest rates and no one was even dreaming of touching the balance sheet, aka, quantitative tightening, qt and now fast forward. To this moment, it's like no, not only are we doing interest rate hikes, we're going to double it up to 50 bips, and now we're actually going to be talking about balance sheet normalization, a balance sheet runoff, whatever you want to call it. That's qt the exact opposite of qe quantitative, easing the thing that injected 9 trillion dollars into our economy and got us into the position we're currently in they're, trying to basically hunt down and murder frankenstein's monster that they created and then the question is well has frankenstein Already done too much damage on the village. Now we've had one outspoken hawk, a member of the fed bullard from st louis he's, actually he's the guy.

When we were at 25 he's like dude, we should do 50, we should do 50, we should do 50. and now that everyone's pretty much pricing in potentially multiple 50 bips rights, he's actually saying hey. We should do 75., a 75 bips hike has been done and the world has not come to an end. So he's the guy that's kind of leading the charge on, let's be more hawkish and get ahead of it.

Just to hope that it's not a too little too late type of a scenario back to pal, he has some other additional commentary, really that if you do the reading between the lines, it's kind of cementing the fact that that's why we saw such a sell-off because He's like folks, this we've come a little bit too far. We flew a little bit too close to the sun. We're gon na do what we can possible and the markets are going to have to deal with it. It may be peak was in march, but won't count on it.

This is obviously in reference to inflation. He's like hey, we hope inflation's done peaking, but the fact that he says won't count on that's telling me that it's going to go even higher fed's powell. Our goal is a soft landing you and me both folks. I love the fact that when they posted this picture here, because this is really the same organization that was telling us - it was transitory to not worry about it at all and then various things were going on.

Let's blame corporations. Let's blame putin! It's always the blame game and then all of a sudden, when you can't do that, they're like yeah, no uh we're just you're misinterpreting what i mean by that word like if you guys, are not seeing a pattern of what both the fed and the government is Doing i don't know you got to pay attention a bit more because they're, never ever going to explain, expect like really they're, never going to accept any gain for anything that they've done. That's obvious at this point powell, probably not going back to the old pre-pandemic economy. So, just straight up saying: oh yeah, no, the the pooch is screwed on this one, we're probably not going back.

I mean that's just brutal, that's a dagger in the heart type of a comment for the economy and that's why we're seeing so much incredible red today. Now, obviously, we didn't actually have an official fed meeting today. Just for those of you who are wondering of like okay, when is the next bout of crazy volatility, mark your calendars from wednesday may 4th it's a two-day meeting the fomc meeting, the federal open market committee meeting and that's where they decide what the next rate hike Is going to be and we'll also get commentary about the qt side of things, quantitative tightening that will all come out at 2 p.m. On wednesday may 4th, and then powell will do a live conference at 2 30.

So this is also now all going to be. Layered, on top of the fact that we're in the middle of earnings season, if you're, watching this on within the first couple days of me, posting the video. The next couple weeks are all going to be every single day. You're going to hear major major companies like that can influence the entire market report, so we have a bunch of earnings of how the companies did in the most recent quarter.

On top of this, i'm expecting nothing but volatility. Now i don't want to be here and just be like doom and gloom just trying to get the information across, and i also want to remind you of one thing april historically, over the past two to three decades is a very, very bullish month. So keep that it's not always all bad, it's not always all good, depending on what you are or aren't looking at. That's something you need to consider, and the last important thing i want to leave you with is just more from a technical basis.

This teal line right here is the 200-day moving average very rudimentary we're considered to be bearish below it, bullish above it. Well, as you can see today, we ran right into it off of positive news, tesla, united american and then boom. We got smacked and it was a pretty brutal sell-off in the short term, depending on when you are aren't watching. This look for the support at 435.60 and then below that pretty much 430.

support support and in terms of resistance, we're watching the region between 448 and 450.. This is our resistance. This is our support. The golden question is, which is going to hold and which is going to break those are going to be the levels i'm personally watching in the short term.

With all that being said, these are just my own thoughts and i would love to get yours in a comment below. I appreciate your time i'll catch you in the next video have a beautiful day.