📈Fed Speech Moves Market
Jerome Powell spoke in front of congress today. He made it clear that they will bring down the housing sector through rates and selling MBS (Mortgage-backed securities). He also stated that the fed has no control over cryptocurrencies and very little control over oil prices and food so both can remain high for some time. Tomorrow, jobless claims will be announced at 8:30 AM. The current estimate is 227K. Jerome Powell will be speaking again at 10 AM est. Crude Inventories are estimated at .569M and will be reported tomorrow at 11 AM. Across the board, Indexes gapped down 1.5% and then traded up to sideways all day. They continue to find resistance around the 5-day moving average. We do not expect a solid move in the indexes, both long or short, until after Powell is done speaking. The best performing sector is biotech as it has held its ground over the past couple of days and traded higher. This sector is resilient to inflation more so than others such as semiconductors. Commodities on the other hand are coming down due to a lack of demand. We are currently seeing it through copper, wheat, corn, etc. For our earnings watch, FDX comes out with earnings tomorrow night. Overall, the markets are grossly oversold and can bounce at any time however we do not see anything technical pointing to this yet.
Watch the video below and focus on what is said about the 10 Year Treasury $TNX
Let’s Get to it !
When we say oversold its important to understand context. The NDX100 got to the level where 95% of its stocks were below the 200 day moving average. (see below)
Another good sign is that spreads between the 10 year treasury and high yields bonds are tightening. The wider the spread the more risk adverse bond traders are. Usually the bond market moves before the equity market so its good to watch for signs of widening or constriction.
Let’s Look at our indexes
Let’s Look at our Stocks
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