Pause, But Hawkish
No hike FOMC news was sold, yet S&P 500 managed to recover around two thirds of the initial decline – driven chiefly by tech. The downside though continues in the premarket session, making it reasonable to evaluate the odds of an intraday reversal higher leading to a good retracement.
While ECB is expected to tighten by 25bp, Germany slipped into recession already. Retail sales aren‘t likely to be met with cheering – not even nominal ones. Same store sales view isn‘t encouraging, and in real terms retail sales are down 4% YoY already. Unemployment claims won‘t paint a picture of growth strength in the real economy either.
So, less bad than feared can be the only catalyst – coupled with more wait and see ECB press conference stance leading to one more buy the dip reaction (led of course by tech, communications and discretionaries, with ideally financials, industrials, materials, retail and smallcaps with perhaps a little energy joining in).
The dreaded R word (recession) isn‘t yet thrown around, but that would change over the next up to two months. For now, it‘s still reasonable to expect ES September contract to make a push above 4,440, but the upswing‘s remaining time can be probably measured in weeks (around 1, max 2) as real assets aren‘t cratering (it‘s normal for PMs to decline on a „tightening surprise“) and USD isn‘t truly rising against euro.
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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 5 of them.
S&P 500 and Nasdaq Outlook
ES broke below 4,410, but I don‘t think 4,380 would be broken today – either late today or during tomorrow‘s quad witching. Till Monday, return to 4,420 is likely unless tech disappoints tomorrow – and market breadth is setting stocks up for a stabilizing rebound Friday.
FOMC delivered shot across the bow, but I don‘t think we have seen the top – we‘re approaching it, but not yet there – later next week is a better candidate for that than this one.
Gold, Silver and Miners
PMs correction hasn‘t yet run its course in time, and $1,930 and $23.15 as first serious support levels still loom, no matter relative copper resilience (which is also making a case against panic in stocks right now).
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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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