0

FED Freak Out

PUBLISHED Sep 24, 2022, 2:36:30 PM        SHARE

img
imgTom Hamilton

September 23, 2022 - If anyone thought that this market was strong or getting stronger, they had their “head handed to them” after Wednesday afternoon. Powell reinforced the FED Board’s hawkish stance that was stated earlier at Jackson Hole . . . fighting inflation and whatever it takes. Hopes of interest rate increases slowing and then going down in early 2023 were pretty much dashed. My old adage: “Weak stock markets react badly to bad news, while strong markets sluff it off”. Folks are nervous about corporate earnings. The “bottom line” is in fact the bottom line. Forward earnings guidance is generally not that good in a slow or receding economy.

This last rally was primarily driven by retail investor with FOMO** (Fear Of Missing Out)** clearly on their minds. Rarely do we see a ‘V’ shaped bottom and if we do, we also see big institutional volume coming in. This time there was only average volume. Very typically institutions need time to accumulate shares so as to not affect prices and this takes time. We’re not seeing that accumulation / base building phase yet.

My past anticipated move down to the 9400 level* (blue lines)* panned out OK, but what next? I’m of two minds:
Scenario A is we continue a little lower early next week then rally back up toward resistance at about 10565. And then begin the process of building a base via the double bottom scenario.

Scenario B is that we bounce around late next week with a minor recovery (a.k.a. head fake) then head steadily lower to 11500 via a selling climax where everyone gives up on heavy selling volume.

A clue as to which one might develop is the US Dollar. To simplify things, a strong US$ equals a weak stock market (yes, that includes crypto too). A weaker US$ would support a stronger / basing stock market. Precious metals, especially silver, will also provide some evidence.

And of course News is going to be a major driver. Coming up on 9/30 we have the PCE data which is an indirect measure of inflation, then 10/13 the latest CPI data. These are potential market movers in either direction. The Short Term Sector table will also provide an idea if money is flowing into or out of growth sectors or defensives sectors (a.k.a. risk on or risk off).

Hope this provides some perspective* (at least one guys view;* I can be wrong*) *of the market. Please feel free to comment. Have a good week. …………… Tom …………….. Price chart by MetaStock; table by www.HighGrowthStock.com. Used with permission. more sector data on: www.Special-Risk.net



Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
Making Waves About Bubbles
Image

GMO's Jeremy Grantham has caused a stir with his latest missive

Estimating Future Stock Returns, June 2022 Update
Image

Stocks always beat bonds. Stocks always beat bonds. Stocks always beat bonds. Stocks always beat bonds.

How Long-Term Capital Gains Stack on Top of Ordinary Income Tax
Image

There is a separate (and some would say mystical) taxation system for long-term capital gains and qualified dividends. Let’s talk about Long-Term Capital Gains Tax and how the standard deduction applies to capital gains.

The Collaborative Economy
Image

The collaborative or sharing economy is an emerging phenomenon that is shaping the cultural, economic and social landscape of the modern world. Applications of the sharing economy concept have found their way into various areas.

Rogue Waves, Rogue Markets
Image

Waves, left uninterrupted, would travel forever. Scientists didn’t know this at that time. Russell’s walk was a turning point in physics. (We’ll get to investing in a minute, just stick with me.)

When Will Stocks Hit Bottom? Rate Cuts May Be The Best Signal
Image

As evidence piles up that the stock market is caught in a bear market, the focus inevitably turns to analytics that will signal a high-confidence forecast that the selling has reached exhausted itself and a bottom has arrived.

New Investor Guide
Image

These top articles have helped guide new investors

The Top Articles to Help with Personal Debt
Image

Debt can be constructive if use right and destructive if abused.

The Top Articles on Personal Finance
Image

These are the top articles on personal finance

The Top Articles on Retirement Planning
Image

These are the Best Articles on Retirement Planning

The Top Dividend Growth Stocks
Image

These are the top dividend growth stocks on the network

The Top Dividend Stocks
Image

These are the top dividend stocks on the network

The Top Financial Literacy Articles
Image

Financial Literacy is the key to wealth creation

The Top Consumer Discretionary Stocks
Image

These are the top consumer discretionary stocks from our top draft picks.

The Top Utility Stocks to Buy Now
Image

Utility stocks are typically safe and stable assets. Typically, they pay a dividend and are great for income generation

What is a small cap stock?
Image

In this article we define what is a small cap stock.

What is a mid-cap stock
Image

In this article we review what a mid-cap stock is

The Top Large Cap Stocks
Image

What is a large cap stock?

Putin and Powell Lift Dollar
Image

Between Putin’s mobilization of 300k Russian troops and Fed Chair Powell expected to lead the central bank to its third consecutive 75 bp hike later today, the dollar rides high.

Recent Stock Purchase September 2022
Image

As you know by now I make a stock purchase every single month no matter what is going on in the world and despite the doom and gloom headlines. Perhaps I am naive or more of an optimist that we will get through these dark financial times somehow.

Resources for Publishers
Resources for New Investors
Boosted with BossCoin