SPX Daily cautiously bearish. Recommended ratio: 5% SPX, 95% Cash. *European and Japanese central banks don't seem to be in a hurry to raise interest rates, Russia is even lowering them, while the US is on track to raise the FFR by at least 50bp (high likelihood of 75bp) this coming Wednesday. "Transitory inflation" (supported by hawkish Fed) became stagflation, which led to a more dovish Fed hoping for a late soft landing, which led to a stronger dollar/simultaneous bear market/and still growing inflation, which led to now needing to consider a hard landing by going "beyond neutral" with regards to FFR in order to ring in inflation. It's tough to say at the moment but it seems as if 50bp is now seen as too little by markets and that 75bp may actually be a bullish catalyst (markets want inflation to come down so that the Fed can ease up on monetary policy).* Price has broken down out of the descending channel from August 2021 and is currently trending down at $3750 as it fast approaches a test of $3706 minor support for the first time since January 2021. Volume remains Moderate (high) and has favored sellers for four consecutive sessions now. Parabolic SAR flips bullish at $4175 resistance, this margin is mildly bullish. RSI is currently retesting both the uptrend line from August 2015 and the uptrend line from 01/26/22 at ~31 as support. Stochastic remains bearish and is currently testing 18.32 support. MACD crossed over bearish in today's session and is currently trending down at -51 while still technically testing uptrend line from March 2020 at -43.84 as support. ADX is currently trending up at 21 as Price continues to fall, this is mildly bearish; if ADX can maintain this correlation with Price above 25 it would be very bearish. If Price is able to bounce here (or formally at $3706 minor support) then it will likely test the lower trendline of the descending channel from August 2021 at ~3900 as resistance. However, if Price continues down past $3706 minor support, it will likely test $3508 minor support for the first time since November 2020. Mental Stop Loss: (two consecutive closes above) $3938.
Comment:
Correction: "Transitory inflation" (supported by dovish Fed) became stagflation, which led to a slightly hawkish Fed hoping for a late soft landing..."