Is It Too Late To Panic?

Since the December 5 QuickTakes titled "Contrarian Indicators Showing Too Many Bulls," we've been warning that bullish sentiment is too high and setting the stage for a pullback. In Sunday's QT titled "Game of Drones," we reiterated: "Is it time to panic in the stock market? It's always best to panic before the crowd does. The issue isn't too many mysterious drones, but rather too many charging bulls."

Today's panic selling was triggered by the Fed's hawkish rate cut and indications that there might be only two rate cuts next year, not four because inflation is turning out to be hotter and the economy is proving to be more resilient than the FOMC expected. That's been our forecast since August.