The markets embraced another 75-basis point interest rate hike by the Fed, even as the U.S. economy contracted for the second quarter in a row. Bad news became good news in today’s markets.

Signals from the Federal Reserve Bank this week were enough to trigger a relief rally in the markets. But rather than that continuing, columnist Bill Schmick says there's a higher probability that we rally in fits and starts.

Fed Chairman Jerome Powell thought the U.S. economy was strong enough to roll with the Fed’s punches of higher interest rates, and a shrinking balance sheet without too much trouble. It was the outside factors — the Ukrainian war, China’s COVID-19 policy, and supply chain problems — that complicate the outlook.

I was dead wrong in my expectations that we could see a substantial rally in the stock market. Instead, we have dropped throughout the week as a barrage of interest rate hikes by central bankers throughout the world pressured stocks lower and the U.S. dollar higher. Plus Friday's spike in the CPI, And now we face the Fed next week.

We may have plateaued on the inflation front, which could give the markets a needed boost higher. That would put us on the final climb of the "W” trend.

No one can tell you exactly when this market is going to bottom. It could have done so already, or we could have another 10 percent decline ahead of us. What to do?

It has been a bumpy week for stocks, and it could get worse if you believe the headlines of the financial press. The issue I see is that just about everyone is expecting a nasty period ahead for equities. That makes me somewhat bullish.