the sp 500 index cratered 36 thursday erasing wednesday afternoon’s gains following this week’s federal reserve meeting and needing a lastminute bump to close ahead of last friday’s lowest point since may 2021 when federal reserve chair jerome powell took the possibility of raising interest rates by 75 basis points at once off the table investors celebrated by pushing the sp 500 3 higher on wednesday but the reality of the ongoing ratetightening cycle to address 40year highs in inflation sunk in a day later to take off the sugar high rising interest rates have contributed to a disastrous start to the year for stocks the sp 500 is down 135 from its january 3 peak and the techheavy nasdaq composite is down 22 after a 5 crash thursday fully in bear market territory for investors eagerly looking for an entry point most strategists caution that there are still some storm clouds ahead powell said inflation is “much too high” at wednesday’s meeting while announcing an interest rate hike of 50 basis points and said similar increases would be considered at its next couple of meetings “the one thing you learn in a bear market is that forecasting the bottom is like catching a falling pitchfork its a spectacular feat if you pull it off but its painful and dangerous to try” says jim stack founder and president of investech research of whitefish montana “one of the dangers in anticipating a bottom lies an understanding that the showdown between fed policy and inflation is just beginning” sam stovall chief investment strategist at cfra called thursday a “capitulation day” and said two technical indicators–the head and shoulders pattern and fibonacci retracement–each suggest the sp 500 could fall to 3800 before it hits a bottom that would be another 84 down from its current level at 4147 and 208 down from its peak broaching bear market levels other experts agree that investors shouldn’t necessarily expect an imminent and sustained rebound “were not expecting a runaway market to the upside where we’d have a strong bottoming process and then we rebound from there” says yungyu ma chief investment strategist at bmo capital markets “even when some of these things turn the corner and the market stabilizes its still a market that takes a step forward and a step back and just tries to grind its way throughout the rest of the year” one contrarian indicator leaning bullish is the american association of individual investor’s weekly investor sentiment survey which surveys its members about the direction of stocks over the next six months the most recent survey released may 5 reported 529 bearish respondents versus 269 bullish the historical average for bearish sentiment is 305 and according to the aaii “unusually high bearish sentiment readings historically have also been followed by aboveaverage and abovemedian sixmonth returns in the sp 500” stocks are likely to remain volatile as the fed continues to combat inflation and the sp 500 has already lost at least 1 on 26 trading days so far this year more than the number of such days in all of 2021 the five biggest daily declines since 2020 have all taken place in the last two months amazon netflix and tesla were some of the day’s notable underperformers each losing more than 7 while tesla founder elon musk’s net worth plunged more than 18 billion netlfix is among five sp 500 companies that has lost more than half of its value this year along with paypal etsy invisalign maker align technologies and epam systems “we are grossly oversold and will continue to bounce along the bottom” louis navellier chairman and founder of wealth management firm navellier said “while bad stocks bounce like rocks good stocks bounce like fresh tennis balls”