[Analysis] S&P post fomc analysis.. I'm still a bear
We mentioned and called out the ridiculousness of the pre-fomc rally in our last analysis.
You may refer to it here
![[Analysis] Pre Fomc analysis on S&P500. The audacity!](https://static.tradingview.com/static/images/svg/idea-image-placeholder.svg)
During the FOMC conference on 03 Nov 2022, Jerome Powell mentioned 2 key points
1) It is too complacent to even think about pausing. Do you hear that Bulls? Even Jerome Powell thinks you are complacent. Tone down the Fed Pivot Nonsense, please. Can't even pause the hike now, how are we even going to Pivot? Jesus Christ.
2) Month Over Month Inflation (PCE) needs to be negative. So far, we have not seen even one negative MoM reading of inflation for 2022.
Currently, the market is held up by Strong earnings from Energy and Finance sectors. The Tech sector's earnings were abysmal. You can clearly see the consequences just by looking at the difference between S&P500 and Nasdaq charts.
The latest rumor that is flying around is China abandoning the Zero Covid policy caused some major run-ups in the HK market and Chinese ADR on the US market. We have solid reason AND evidence to believe that this is nothing but a rumor. Enjoy the rally while it last. Be sure to lock your profits if you have long positions
The resistance for S&P500 now is 3900-4000. The market has no rational reasons to rally beyond this level unless MoM CPI/PCE goes into a substantial negative reading. The market MAY rally irrationally (election nonsense), but any irrational rallies will eventually head back down. The recent rally in Oil prices is not positive as it can send the CPI reading higher. In the first place, the reason why CPI came down was because of the Oil price dropping.
We also have strong reasons, such as the weakening Service Sector, to believe that the market has another leg down to the 3200-3400 level before a true Pivot occurs (probably in 2Q 2023).
If you are trying to bottom-pick the current October's bottom, do so in batches. Ensure you have enough cash to average down. Do not go "All-In"
Personally, we will still be staying neutral or short bias. The opportunity cost is too much to be playing long right now.
This week is CPI and Election week. Stay safe folks!
You may refer to it here
![[Analysis] Pre Fomc analysis on S&P500. The audacity!](https://s3.tradingview.com/x/XGqet0IJ_big.png)
During the FOMC conference on 03 Nov 2022, Jerome Powell mentioned 2 key points
1) It is too complacent to even think about pausing. Do you hear that Bulls? Even Jerome Powell thinks you are complacent. Tone down the Fed Pivot Nonsense, please. Can't even pause the hike now, how are we even going to Pivot? Jesus Christ.
2) Month Over Month Inflation (PCE) needs to be negative. So far, we have not seen even one negative MoM reading of inflation for 2022.
Currently, the market is held up by Strong earnings from Energy and Finance sectors. The Tech sector's earnings were abysmal. You can clearly see the consequences just by looking at the difference between S&P500 and Nasdaq charts.
The latest rumor that is flying around is China abandoning the Zero Covid policy caused some major run-ups in the HK market and Chinese ADR on the US market. We have solid reason AND evidence to believe that this is nothing but a rumor. Enjoy the rally while it last. Be sure to lock your profits if you have long positions
The resistance for S&P500 now is 3900-4000. The market has no rational reasons to rally beyond this level unless MoM CPI/PCE goes into a substantial negative reading. The market MAY rally irrationally (election nonsense), but any irrational rallies will eventually head back down. The recent rally in Oil prices is not positive as it can send the CPI reading higher. In the first place, the reason why CPI came down was because of the Oil price dropping.
We also have strong reasons, such as the weakening Service Sector, to believe that the market has another leg down to the 3200-3400 level before a true Pivot occurs (probably in 2Q 2023).
If you are trying to bottom-pick the current October's bottom, do so in batches. Ensure you have enough cash to average down. Do not go "All-In"
Personally, we will still be staying neutral or short bias. The opportunity cost is too much to be playing long right now.
This week is CPI and Election week. Stay safe folks!