Second FOMC

S&P 500 refused further decline, but picture is far from impending rebound strength. One though can‘t get rid of the impression from Kashkari‘s speech (the Fed is happy about the marlet reaction to Powell‘s FOMC speech), that this stock market rally isn‘t looked at exactly rhe same way as the summer one. Still, short-term caution rules as real assets haven‘t yet recovered, and the dollar relief rally had been confirmed as having started – I‘m looking for relatively uneventful session prior to Powell‘s yet another speech – speech which would give direction for the remainder of this week, till Friday‘s consumer confidence (yes, unemployment claims are likely to come in strong.

Bringing up yesterday‘s extensive analysis:

(…) So, stocks are correcting, but the short-term picture is far from clear – while the defensives are refusing to decline, financials haven‘t rolled over yet (and regional banking acts still OK). Neither value nor tech reversed on rising volume, indicating that this storm could be over in a couple of days, no matter the disastrous earnings thus far (yes, AAPL and beyond the tech layoffs) bringing negative surprises to -5.3% so far.

Markets aren‘t fearing a hard recession, but stocks are uneasy – in the very short-term.The stunner creeping in is that the Fed somehow pulled it off, that soft landing – and job market data were taken as a proof, which however has consequences for services inflation even commodities, precious metals are nicely consolidating. Had been, till Friday – but that appears as a buying opportunity when deterioration in economic data sends yields and the dollar down. Summing up, I continue to think the soft landing thesis would be disproved by end of Q2 2023, and that a mild recession is ahead.

Let‘s say that the soft landing calls would come to bite back those acting on them, and that real assets (oil defended the $81-83 zone by the way, and copper is back above $4 – precious metals are waiting for USD and Fed green light, but haven‘t rolled over into a bear) will correspondingly rise once it becomes apparent that the Fed hawkish path of newly three 2023 hikes with deferred easing, isn‘t going to be without consequences / prove doable. The bond market will decide.

See you on my feed later today, and throughout for the Powell speech!

S&P 500 and Nasdaq

4,105 – 4,095 is the key support zone, followed by 4,070 – reaching which would require bond market weakness with junk bonds leading the decline. That‘s not likely to happen now, for I view the consequences of Powell‘s speech to be rather positive for TLT, and not feeding excessively into the USD relief rally (well worth watching it with Bollinger Bands displayed, to see where the low hanging fruit was). Chart courtesy by www.stockcharts.com.

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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 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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