MARKETS: CRASH OR CORRECTION?

By Gregory Mannarino TradersChoice.net
The stock market IS NOT CRASHING.
Currently the stock market is in a corrective phase, something I have been saying that the market needed for months on my YouTube blog. 
Here is a bit of information for you… markets do not always go straight up! 
As obvious as that may seem, every time that the stock market gives back or “corrects”—people start to panic.
Just to put this into perspective… Last year, 2021, the S&P500 put on more record highs than ever before. Now, here we are just one month into 2022, and the market is experiencing a normal corrective phase. A corrective phase which will lead to more record highs not too far off. 
People tend to fixate on what the stock market does, which is generally just a random walk with an upward drift however, what people SHOULD be looking at are market drivers.
I have outlined for many years that price action in the stock market derives value from what is occurring in the debt market. Understanding that the stock market derives value from action in the debt market, then the stock market itself can be considered a derivative—meaning it derives value from what is occurring in the debt market. 
Key market drivers are:

1. The 10-year yield.
2. The yield curve itself.
3. The (DXY) or relative strength of the dollar.
4. Crude oil. 
5. Risk, which can be quantified by looking at the MMRI (Mannarino Market Risk Indicator). The MMRI can be found, and is free for everyone, right on my website TradersChoice.net
6. The balance sheet, or debt, being held by the Federal Reserve. The balance sheet of the Federal Reserve can be found right on the Federal Reserve’s website.

The talk as of late is how Fed rate hikes will affect the market. I made a recent call prior to the last Fed meeting on monetary policy which was: “If the Fed Does Not Raise Rates, The Stock Market Will Fall,”—my call was exactly right.
However, I believed that the Federal Reserve WOULD raise rates though, as the market was pricing a hike in. My call on the Fed raising rates was wrong, but my call on the market reaction was spot on.
The Federal Reserve, despite the announcement of a “taper,” has not tapered at all. (See the following chart of the Federal Reserve Balance Sheet).

In fact, since the Federal Reserve’s announcement of a “taper,” asset purchases continue unabated.
In my view, when the Fed does raise rates, most likely by March now, the stock market will respond in a positive way, that is go higher.
The REAL CRASH will begin with a meltdown/sell-off in the debt market- which is the driver of the stock market. 
At the present time there are simply no red flags, which tells me that the current stock market action is nothing more than a normal corrective phase.