Original Post: [https://www.reddit.com/r/wallstreetbets/comments/1sq9j1l/upcoming\_stock\_market\_drop\_will\_be\_epic\_fury/?utm\_source=share&utm\_medium=web3x&utm\_name=web3xcss&utm\_term=1&utm\_content=share\_button](https://www.reddit.com/r/wallstreetbets/comments/1sq9j1l/upcoming_stock_market_drop_will_be_epic_fury/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button)
I messed up the timing, but I didn’t hear no bell. In fact, the fundamentals towards my thesis have gotten even stronger. I may have been a little early, but I’m not wrong.
**Macroeconomic analysis:**
I still believe 🥠does not care about the strait opening because the long term plan is to get Europe and Asia to be more dependent on USA oil. Unfortunately, that still means there will be short term pain for the global economy. The oil shortage cannot be avoided now, even if the strait were to open right now because it takes time to restore the supply chain. The oil shock is going to lead to a much higher surge in short term inflation than what we’ve seen thus far. Long duration treasury bond yields are going to surge higher, well above 5% and perhaps 6-7%, reflecting investor confidence that the Fed has lost control of inflation. The narrative will be that the Fed has to hike rates to combat inflation, which is totally wrong btw. What the Fed will likely have to do is cut rates because the short term inflation surge will lead to demand destruction and liquidity drain from financial markets, more commonly known as a recession.
**Technical Analysis:**
[SPY Daily Chart](https://preview.redd.it/7hh03bkz055h1.png?width=2559&format=png&auto=webp&s=37fea261960374cfa1101681493a58ccf856978f)
A bearish divergence has formed on the SPY daily chart on MACD and RSI. Likely, the entire rally since the end of March will be given back in a month or two. Base case price target is SPY 600, but it could go a lot lower.
**Position:**
https://preview.redd.it/s46dt4a1155h1.jpg?width=1169&format=pjpg&auto=webp&s=ffdd3f816ab2640b06cbb4ab7c724e918cff0b68
I don’t care that my position is down by half. This dip ain’t nothing.
**TL;DR:**
Oil shortage -> short term inflation surge -> long duration treasury bond yield surge -> demand destruction and liquidity drain aka recession