Market overview: Will They Or Won‘t They
S&P 500 is gyrating with the Fed rate hike speculation – 50 or 75bp? Treasuries are still demanding a higher one now and more later as inflation hasn‘t even temporarily slowed down. But there was a moderate risk-on turn in bonds, which looks like facilitating the pause within the stock market decline on the FOMC today, meaning we could see a little bounce, which would be reasonable to sell into on its exhaustion (with a tight stop loss unless I change the rough game plan for the intraday traders reading). Things sure start with locking in sizable open short profits.
Precious metals had a bad day yesterday and, together with copper, were indeed short-term bearish. Still, just one Fed meeting would be enough for an intraday reversal (when they announce backing off tightening, float more than gentle focus on supporting real economic growth, or voice concerns about the job market health). Even with their models, this would become obvious just in time for autumn – it must be said, though, that the current tightening (and markets frontrunning that especially) is helping to dent commodities, with metals suffering the most. Crude oil looks to be ranging, and a good stop-loss protected open profits yesterday. If you haven‘t already, please check more on my style and philosophy so as to make the most of the daily analyses.
Overall, I‘m looking for a little risk-on reprieve – an upswing attempt unless the Fed turns up with really hawkish messaging that at least meets market expectations. Odds are they would approach meeting these, and how convincing is going to be the message and the delivery will influence market reaction – I‘m not looking for a bullish surprise today, but for a corrective move that goes sideways to a somewhat upwards. That would concern both paper and real assets, together with cryptos (to a lesser degree), in spite of all the Binance issues indicating that much is happening under the surface there.
Finally, remember that no matter how much tightening, markets are forward looking – and those beaten down real assets would just at some point start ignoring higher yields. Even before the Fed telegraphs anything…
Let‘s get into the key richly annotated charts (all courtesy of Stockcharts.com) for today – stocks:
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All essays, research, and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks, and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading, and speculating in financial markets may involve a high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.
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