<p>The day is November 24th, 2021. NDX saw a daily bullish engulfing candle into close, the day before Thanksgiving when markets were closed in observance of the holiday. Bulls were at their most confident, high off the hopium and certainty of a Santa Rally. Two days later the Dow Jones opened down over -900 points, one of the worst openings seen since the Covid crash nearly two years earlier - all over fears over a new covid variant out of South Africa. Calls were nuked, the hopes of a Santa Rally were snuffed out, and bears were having a second Thanksgiving feast. </p><p>When stocks and indexes are trading at ATH’s, the FOMO traders experience is typically the highest, and it’s when they begin to make mistakes. They don’t manage risk, don’t bother hedging, and ignore signs of weakness or reversals. </p><p>If there is going to be any surprise bouts of volatility, it will likely come during the next few weeks into the Christmas holiday and New Year. Manage risk, especially on large winning positions. A “surprise” event and a spike in volatility can wipe out gains much faster than those unrealized gains appeared.</p><p>Moving on…</p><p>Lots of talk recently of a pause coming next month at the Fed’s last FOMC meeting for the year. Right now tradoors slightly lean towards an additional 25bps cut next month. For now this is my base case, however the strength in the dollar and the repeated tests above $107 tell me a pause is coming; whereas golds remarkable strength this week says a different story, that another rate cut is coming.</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Ffafa0fef-c662-456e-b291-1b220ab8be22_2828x1672.png" target="_blank"><div class="image2-inset"><source type="image/webp" /><img alt="" class="sizing-normal" height="861" src="https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Ffafa0fef-c662-456e-b291-1b220ab8be22_2828x1672.png" width="1456" /><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg class="lucide lucide-refresh-cw" fill="none" height="20" stroke="currentColor" stroke-linecap="round" stroke-linejoin="round" stroke-width="2" viewBox="0 0 24 24" width="20" xmlns="http://www.w3.org/2000/svg"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg class="lucide lucide-maximize2" fill="none" height="20" stroke="currentColor" stroke-linecap="round" stroke-linejoin="round" stroke-width="2" viewBox="0 0 24 24" width="20" xmlns="http://www.w3.org/2000/svg"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>I still think we see another rate cut, because it makes the Fed’s job easier in the short term. Is it the right choice? Likely not, and it means risk on assets such as gold, growth and tech stocks will continue higher in the coming weeks and months. </p><p>If the Fed does pause, the dollar is likely heading towards $109-109.50 in the short term. Longer term, a revisit of 2022 highs is likely too ~ $113+. The United States is undoubtedly entering a difficult period economically, and the games that Yellen & Powell have played these last few years are going to unravel, and it will be ugly. A higher dollar also leads to outflows from EM’s around the world, so while Europe and Japan may be able to stave off a stronger dollar in the short term, longer term with DXY above $109 & $113, eventually those markets also come under great duress.</p><p>See the chart below, said outflows from EM’s are already beginning… This does make my long China thesis difficult, unless markets think China has front run the global economic slowdown while western economies such as the US & EU have only kicked the can down the road through political and economic games, such as fudging monthly jobs data, only to correct it the following month… I do think there is a chance at this, and as I will share in the coming weeks in my Yearly Outlook, volume profiles in some China names are similar to that of massive accumulation phases we’ve seen in other markets the past couple years.</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F5719a271-a965-4cac-b1da-f7a1a7ffc188_1004x774.jpeg" target="_blank"><div class="image2-inset"><source type="image/webp" /><img alt="" class="sizing-normal" height="774" src="https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F5719a271-a965-4cac-b1da-f7a1a7ffc188_1004x774.jpeg" width="1004" /><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg class="lucide lucide-refresh-cw" fill="none" height="20" stroke="currentColor" stroke-linecap="round" stroke-linejoin="round" stroke-width="2" viewBox="0 0 24 24" width="20" xmlns="http://www.w3.org/2000/svg"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg class="lucide lucide-maximize2" fill="none" height="20" stroke="currentColor" stroke-linecap="round" stroke-linejoin="round" stroke-width="2" viewBox="0 0 24 24" width="20" xmlns="http://www.w3.org/2000/svg"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><div class="subscription-widget-wrap-editor"><div class="subscription-widget show-subscribe"><div class="preamble"><p class="cta-caption">Father Time's Chronicles is a reader-supported publication. 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