D&D Note (8.8.2022) ~ S&P 500 Fails Again to Break Out of Trading Range ~ #stockmarket

D&D Note (8.8.2022) ~ S&P 500 Fails Again to Break Out of Trading Range ~

Stocks started the day attempting to rally and break out from the current trading range. An hour and a half into trading the rally failed and traded lower through the session.

It continues to look more likely the S&P 500 won’t break out and more likely to revert to the mean of trading range.

A worrisome sign was the big move in meme stocks today in a classic FOMO trade and not signs of a sustainable rally.

A positive sign is the 50 day moving average is now sloping up, the 100 day is flattening. However the 200 day moving average is still downward sloping which is a negative sign.

One Year S&P 500 Chart:

Fridays surprise jobs number puts pressure on the FED to continue to be hawkish and raise interest rates.

FED Governor Michelle Bowman said she sees a “similarly sized” rate hike in the next meeting meaning another 75 basis point hike.

This weeks CPI number on inflation is massive in terms of market direction and FED funds futures.

Investors must keep in mind that Quantitative Tightening accelerates in September and is the equivalent of a 50 basis point hike. Plus we have a strong dollar which is also equivalent to a 50 basis point rate hike.

September we are most likely going to see a 75 basis point hike but with the other equivalent hiking from QT and the Dollar the FED could pause after September.

The New York Federal Reserve’s monthly Survey of Consumer Expectations showed a decrease in future inflation expectations at 6.2% over the next year and 3.2% for next three years compared to June’s survey of 6.8% and 3.6%.

JPMorgan put out a note today to investors saying that cryptocurrencies “have found a floor” post the Tether and leverage blowout.

Semiconductor stocks began rolling over today after hitting the downward trend line and Nvidia today announcing weaker-than-expected revenue.

D&D is likely to trim more positions tomorrow ahead of Wednesdays CPI print.

Closing Markets (as of 1:15pm PST)

DOW up 0.09%

S&P 500 down -0.12% (4,140.06)

NASDAQ down -0.1%

VIX up 0.47% to 21.25

2 Year Note down -2.45bp to 3.20%

10 Year Note down -8.24bp to 2.74%

Oil up 1.74% to $90.56 a barrel.

Gold up 0.79% to $1,805.40 an ounce.

Bitcoin up 3.29% to $23,926.13

Ethereum up 4.21% to $1,785.11

~ Dave James / Principal Trader and Market Strategist