Worries About Earnings Growth Potential and Financial Market Dysfunctions Lead the Market

Bulls continue to face strong headwinds amid worries about earnings growth potential and financial market dysfunctions.

Apple Selloff

Investors seemed particularly caught off guard by a rare downgrade to Apple‘s stock by Bank of America following reports of low iPhone demand. The resulting selloff left the stock down almost -5% and wiped roughly -$120 from Apple’s market cap. Apple is of course America’s most valuable publicly traded company, which means it is the most heavily weighted stock in the S&P 500, accounting for over 7% of the index’s total market value.

Naturally, a big selloff in Apple is going to drag on the broader market. BofA’s downgrade also highlighted bigger concerns that are likely to weigh on other companies’ profitability in the quarters ahead, most notably slower business and consumer spending, and a stronger US dollar.

Bears are quick to point out that early earnings results are already revealing weaker-than-expected Q3 results. Nike‘s results unveiled ongoing supply chain problems as well as lingering excess inventories and currency headwinds. CarMax yesterday was the latest in a long list of companies warning of increasing “affordability challenges” for consumers amid the highest inflation levels in some four decades and rising borrowing costs.

Declining affordability was a key reason behind Moody’s downgrade yesterday of the entire global automotive industry from “stable” to “negative”. The auto industry, similar to Apple, Nike, and most other companies, is also struggling with ballooning costs related to raw material shortages, tight labor markets, and skyrocketing energy prices.

Bottom line, the outlook for earnings in upcoming quarters is fading, making it tough for investors to justify pushing prices any higher at this point. Like I’ve mentioned many times, an earnings recession could actually be worse for the stock market than an actual full-blown economic recession.

Is the Financial System at Risk?

Wall Street also remains nervous about contagion spreading from bond and currency market dysfunctions in the UK, Italy, Japan, China and others.

While every country has unique problems that are partially responsible for recent volatility, it also partially stems from the aggressive monetary tightening being conducted by most Western central banks.

In general, a rising rate environment tends to uncover imbalances and systematic risks that might be unknowingly lurking in financial systems. Just think back to the subprime mortgage crisis and Lehman Brothers collapse in 2008 that eventually erupted into a full-blown global financial meltdown.

Some contend it began when the Fed started lifting rates from 2004 to 2006, going from 1% to 5.25%, which led to an extreme slowdown in the housing market and ballooned the payments on subprime mortgages into unaffordable territory…and the contagion just spread from there.

So when financial markets start acting strangely and central banks are making emergency interventions, investors can be understandably nervous that an even bigger problem might be around the next corner.

On the geopolitical front, Russia is expected to formally annex four Ukraine regions in a ceremony today that’s supposed to include an address from President Vladimir Putin. Some think Putin may offer to enter a ceasefire with Ukraine. While Ukraine is unlikely to agree, they could face pressure from western countries that are worried about the threat of a wider conflict with Russia.

Data to Watch

Looking ahead to next week, the main highlight will be the September Employment Situation due out next Friday. There is a slew of other key data due as well, including ISM Manufacturing and Construction Spending on Monday; Factory Orders and the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday; ADP’s private payroll report, the US Trade Balance, and ISM Non-Manufacturing on Wednesday; and Wholesale Inventories and Consumer Credit on Friday. The only earnings of note next week are Conagra Brands and McCormick & Co. on

S&P 500 (SPY) Dives To 3635 As Initial Jobless Claims Decline

Key Insights

  • S&P 500 found itself under pressure after the release of Initial Jobless Claims report.
  • Auto stocks are losing ground as traders react to the disappointing report from CarMax. 
  • A move below the support at 3635 will open the way to the test of the next support level at 3600.

Traders Worry About Hawkish Fed

S&P 500 is down by more than 2% in today’s trading session as traders react to the better-than-expected Initial Jobless Claims report.

The report indicated that 193,000 Americans filed for unemployment benefits in a week, compared to analyst consensus of 215,000. The Fed has previously stated that job market remained too tight. The report confirmed that the job market was in good shape. This is bearish for stocks as the Fed is forced to raise rates aggressively to cool demand and fight inflation.

Auto stocks found themselves under pressure after CarMax report missed analyst estimates on both earnings and revenue. The stock is down by 23% in today’s trading session. Tesla, General Motors, and Ford are down by 5-6% as traders fear that rising loan rates have started to put pressure on demand for vehicles.

Tech stocks have also moved lower today, which is not surprising as the market prepares for higher interest rates. AMD, NVIDIA, and Apple were among the biggest losers in this market segment today.

The current sell-off is broad, and even energy stocks are under pressure despite the rebound in oil markets. The market views Fed’s actions as the biggest danger for stocks, so any news that signal that Fed will continue to raise rates aggressively lead to a sell-off.

S&P 500 Tests Support At 3635

S&P 500

S&P 500 continues its attempts to settle below the support level at 3635. RSI is close to the oversold territory, but there is enough room to gain additional downside momentum in case the right catalysts emerge.

If S&P 500 settles below 3635, it will move towards the next support level at 3600. A successful test of this level will push S&P 500 towards the support at 3580.

On the upside, the previous support at 3660 will serve as the first resistance level for S&P 500. In case S&P 500 climbs back above this level, it will head towards the next resistance at 3700. A move above 3700 will open the way to the test of the resistance at 3725.

For a look at all of today’s economic events, check out our economic calendar.

UPDATE: Is the Worst Really Over for US Stocks?

Last month, we posed the question: “Is the worst over for US stocks?”

Answer: apparently not.

A week after that August 10th article, the S&P 500 did climb higher, only to be resisted by its 200-day simple moving average.

The blue-chip stock index even closed above the 50% Fibonacci retracement level, which was the key criteria for suggesting that the worst is over for the 2022 rout in US stocks.

As cited in the August article, according to data by the CFRA and S&P Global, in 18 of the 19 ‘bear markets’ seen since World War II, the S&P 500 then went on to a fresh bull run after closing above its 50% Fib retracement line.

But as the saying goes across financial markets “Past performance is no guarantee of future results.”

And that track record (stated above) now needs to be updated to “18 out of the past 20 bear markets …”.

Since that August article, the S&P 500 has unwound all of its summer gains, even printing intraday prices not seen since end-November 2020.

In essence, we have seen “worse” levels this week for the S&P 500 compared to those June lows.

Why Did the S&P 500 Erase Its Summer Gains?

Recall the premise for the S&P 500’s summer rally, as stated in last month’s article:

“Arguably, the primary reason is that markets believe that the Fed has done the largest chunks of its rate hikes already.”

Additionally, the S&P 500’s summer gains was based on the idea of a “dovish pivot” by the Fed.

That’s to say that markets had expected the Fed to be less courageous about sending US interest rates higher, for fear of triggering an economic recession.

But now we know better.

Since then, we have seen the US inflation data stubbornly printing near its highest levels in around 40 years.

Hence, many Fed officials, including Fed Chair Jerome Powell himself, have since sent a strong message to the markets:

The US central bank is hell bent on taming multi-decade high inflation by sending US interest rates even higher, and is willing to tolerate economic pain along the way.

Markets duly paid heed and raised their forecasted peak for this ongoing Fed rate hike cycle by about 90 basis points!

  • Back in August, markets expected that US rates won’t go higher than 3.6% in March 2023.
  • Today, that forecasted peak is now expected to reach nearly 4.5% by March.

What Do Higher Us Interest Rates Mean for the Us Economy?

Essentially, the Fed wants to see some “demand destruction”.

Policymakers want to see less money in an economy chasing after scarce goods and services.

That should, in theory, discourage businesses from ramping up their selling prices, hopefully resulting in slower inflation.

However, more economic pain could also bring about a shrinking economy i.e. a recession.

What Do Higher US Interest Rates Mean for the US Economy?

More downside likely.

With the US unemployment rate forecasted by the Fed to rise to 4.4% by end-2023, significantly higher from the 3.7% figure from last month, more jobless Americans should translate into less demand/spending in the US economy, which should also mean less earnings for companies.

Lower earnings due to such “economic pain” should also lead to lower share prices, with such a narrative already dragging on the S&P 500.

Tech Not Spared

Also, higher interest rates mean its tougher for so-called “growth companies” to continue borrowing cheap loans to fund its expansion plans while forsaking profitability.

Hence, as higher interest rates chock some of the potential growth (and earnings potential) for these growth companies, that has led to lower stock valuations as well.

Keep in mind that, with many of these growth stocks concentrated in the tech sector, no surprise then that the tech-heavy Nasdaq 100 has a year-to-date decline of almost 30%, falling deeper than the S&P 500’s 22% year-to-date decline.

However, the Nasdaq 100 is still managing to not surpass its June lows … for now.

Also, note that tech-led declines would only exert more downward pressure on the S&P 500.

This is because IT stocks (think Apple, Microsoft, Nvidia, etc.) account for over a quarter (26.6%) of the S&P 500.

So, if you couple the S&P 500’s exposure to tech stocks with the weightage of consumer discretionary stocks (e.g. Amazon, Tesla, McDonald’s, etc. – which tend to take an earnings hit when customers have less disposable income during times of economic pain), then a US recession that’s triggered by higher US rates would only exert more downward pressure on the S&P 500.

NOTE: The S&P 500 index is widely used as the benchmark to gauge how overall US stocks are performing.

So What’s Next for the S&P 500?

Brace for the low-3000s.

In market fears surrounding a US recession continue ramping up, that may send the S&P 500 to as low as:

  • 3400: around the pre-pandemic peak set in Feb 2020
  • 3200: double-bottom from Sept/Oct 2020

Though for more immediate consideration, the S&P 500 is testing a crucial support level – its 200-week simple moving average.

This technical indicator has supported the S&P 500 in recent years, with such an episode last occurring at end-2018.

Athough the Fed was also busy raising interest rates back in 2018, those benchmark rates today have already surpassed those levels and are now standing at its highest since 2008 at 3.25%.

And US inflation is still around its highest levels since the early 1980s.

So if this 200-week SMA doesn’t hold, the S&P 500 is likely to then set course for the low-3000 region, dragged down by heightened  fears over a potential US recession and higher-for-longer US interest rates.

For more information visit FXTM.

XRP Faces Risk of a Return to Sub-$0.40 on Slow SEC v Ripple Progress

Key Insights:

  • On Wednesday, XRP rose by 0.65% to end the day at $0.4489. XRP had fallen to a session low of $0.41736 before a shift in market risk appetite.
  • Apple Inc. (AAPL) and the Bank of England delivered a choppy mid-week session as investors await updates from the SEC v Ripple case.
  • However, the technical indicators are bullish, with XRP sitting above the 100-day EMA, supporting a return to $0.50.

On Wednesday, XRP rose by 0.65%. Partially reversing a 4.68% slide from Tuesday, XRP ended the day at $0.44890.

A bearish start to the day saw XRP slide to an early morning low of $0.41736. XRP fell through the First Major Support Level (S1) at $0.4249 before rallying to a late high of $0.45515. However, falling short of the First Major Resistance Level (R1) at $0.4772, XRP slipped back to end the day at sub-$0.45.

Slow Progress in the SEC v Ripple Case Leaves XRP in Choppy Waters

A lack of news updates on the SEC v Ripple case left XRP in the hands of the broader crypto market. News of Apple Inc. (AAPL) pulling plans to ramp up the production of the new iPhone 14 product suite for weak demand weighed on riskier assets. However, a Bank of England intervention to stabilize the Pound and the UK bond markets delivered support through the afternoon session.

This morning, inflation and recession jitters resurfaced, however. Risk-off sentiment spilled over from the global equity markets, leaving XRP under pressure through the morning.

Before the Wednesday session, investor angst over the lack of a swift conclusion to the SEC v Ripple case had sent XRP back to sub-$0.50. Investor optimism had driven XRP to $0.55 for the first time since May in response to the SEC and the defendants filing the Motion for Summary Judgment.

With the next date in the Court calendar being October 18, XRP could come under more selling pressure should market sentiment towards riskier assets fail to improve.

XRP Price Action

At the time of writing, XRP was down 2.14% to $0.43929. A mixed morning saw XRP rise to an early high of $0.45107 before falling to a low of $0.43500.

XRP under morning pressure.
XRPUSD 290922 Daily Chart

Technical Indicators

XRP needs to move through the $0.4405 pivot to target the First Major Resistance Level (R1) at $0.4636. Market risk appetite and sentiment towards the SEC v Ripple case would need to improve materially to support a breakout from the Wednesday high of $0.45515.

An extended rally would support a run at the Second Major Resistance Level (R2) at $0.4783 and test resistance at $0.4850. The Third Major Resistance Level (R3) sits at $0.5161.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.4258 in play. Barring an extended sell-off, XRP should steer clear of sub-$0.41 and the Second Major Support Level (S2) at $0.4027.

The Third Major Support Level (S3) sits at $0.3649.

XRP support levels in play below the pivot.
XRPUSD 290922 Hourly Chart

The EMAs and the 4-hourly candlestick chart (below) sent a bullish signal.

At the time of writing, XRP sat above the 100-day EMA, currently at $0.42288. The 50-day EMA narrowed to the 100-day EMA, while the 100-day EMA widened from the 200-day EMA. The signals were mixed.

A breakout from the 50-day EMA ($0.44733) would support a run at R1 ($0.4636) to retarget $0.48. However, failure to move through the 50-day EMA ($0.44733) would give the bears a run at S1 ($0.4258) and the 100-day EMA ($0.42288). The 200-day EMA sits at $0.39500.

EMAs remain bullish.
XRPUSD 290922 4-Hourly Chart

The GBP/USD Is Back in the Red After the BoE Fueled Wednesday Rally

On Wednesday, the Bank of England stepped in to calm the markets and restore confidence in the Pound.

Tagged the ‘Gilt Market Operations,’ the BoE released details of the Bank’s purchases of longer-dated UK government bonds.

According to the announcement,

“The Bank will carry out purchases of long-dated gilts in a temporary and targeted way. The purpose of these purchases is to restore orderly market conditions.”

The Bank added,

“Given current market conditions, the Bank stands ready to purchase conventional gilts with a residual maturity of more than 20 years in the secondary market, initially at a rate of up to £5 billion per auction. These parameters will be kept under review in light of prevailing market conditions.”

The first auction took place on Wednesday, and subsequent auctions will happen daily until October 14, 2022.

Market Reaction to the BoE Intervention Was Ultimately Bullish

On Wednesday, the GBP/USD pair rallied by 1.45% to end the session at $1.08879. The Pound had tumbled to a low of $1.05381 before surging to a day high of $1.09160. However, this morning, the GBP/USD pair was on the back foot early in the Asian session, falling by 0.33% to $1.08520.

GBP/USD under pressure after Wednesday relief rally.
290922 GBPUSD Daily Chart

While the purchase of longer-dated gilts delivered order, market concerns over the UK Government’s mini-budget and the implications to inflation and monetary policy remain. On Tuesday, BoE Chief Economist Huw Pill said that the BoE would wait until the November MPC meeting to deliver a policy response to the mini-budget.

However, market disorder forced the Bank into action.

Beyond the Pound, market reaction to the Bank of England intervention was evident across the asset classes.

On Wednesday, the NASDAQ 100 rallied by 2.05%, with the Dow and the S&P500 ending the day with gains of 1.88% and 1.97%, respectively. The US futures had been in negative territory through the European session before the market response to the BoE move.

The European markets also bounced back from heavy losses, with the DAX30 rising by 0.36% and the FTSE100 ending the day up 0.30%. However, the gains were modest, with recession jitters and hawkish Fed chatter pegging the majors back on the day.

Elsewhere, the crypto market recoupled with the US equity markets. The crypto market had briefly decoupled in response to the Fed’s rate hike and FOMC projections.

Crypto - NASDAQ correlation
Total Market Cap – NASDAQ – 290922 5 Minute Chart

Recovering from an early morning slide to a Wednesday low of $865.4 billion, the crypto market cap is currently up $14.1 billion to $910.0 billion.

Early in the Wednesday session, news of Apple Inc. (AAPL) pulling plans to ramp up production of the new iPhone 14 product suite had sent riskier assets into the deep red.

Looking at the Asian markets this morning, the risk-on sentiment from the US session has failed to provide support. At the time of writing, the ASX200 was down 0.53%, with the NASDAQ 100 Mini down 16 points.

The Bank of England will need to do more to restore confidence in the Pound. Hawkish central bank chatter will also remain a headwind for riskier assets. Warnings from the likes of Apple Inc of weakening demand will continue to add to the market angst.

Crypto Market Daily Highlights – BNB and BTC Lead the Top Ten

Key Insights:

  • It is a mixed Wednesday for the crypto top ten, with binance coin (BNB) and bitcoin (BTC) leading the top ten.
  • The Bank of England calmed the markets on Wednesday, which had hit deep red in response to Apple’s iPhone 14 production news.
  • With 140 minutes of the session remaining, the total crypto market cap is up $14.1 billion to $910.0 billion.

It is a mixed Wednesday session for the crypto top ten. BNB and BTC lead the top ten, while ADA struggles through the mid-week session. A choppy session saw BTC fall to sub-$18,500 before bouncing back. However, BTC is on target to fall short of $20,000 for the ninth time in ten sessions.

Through the early part of the Wednesday session, news of Apple Inc (AAPL) pulling plans to ramp up the production of the new iPhone 14 product suite weighed on riskier assets. However, the Bank of England calmed market tension later in the session by buying longer-dated bonds to combat the impact of the UK Government’s mini-budget on the British Pound.

Throughout the session, the crypto market recoupled with the NASDAQ 100, which ended the day up 2.05%. Ahead of the BoE intervention, the NASDAQ 100 Mini had spent most of the day in negative territory.

NASDAQ 100 correlation.
Total Market Cap – NASDAQ – 290922 5 Minute Chart

Crypto Market Bounces Back in Risk-On US Session

On Wednesday, the crypto market cap tumbled to an early low of $865.4 billion in response to the Apple news. However, in response to the BoE intervention, the crypto market cap rose to a late high of $917.8 billion before easing back.

With 140 minutes of the Wednesday session remaining, the crypto market cap is up $14.1 billion to $910.0 billion.

Crypto market bounces back on BoE intervention.
Total Market Cap 290922 Daily Chart

The Crypto Market Movers and Shakers from the Top Ten and Beyond

It is a mixed Wednesday session for the crypto top ten.

BNB and BTC lead the way, with gains of 3.71% and 2.83%, respectively.

XRP (+2.05%) and SOL (+1.87%) also found strong support, while DOGE (+0.22%) and ETH (+1.14%) trailed the front runners.

ADA currently bucks the top tend trend, with a 0.23% loss.

From the CoinMarketCap top 100, it is a mixed session.

Helium (HNT) leads the way, rallying by 10.29%, with synthetix (SNX) and kava (KAVA) seeing gains of 9.27% and 6.20%, respectively.

At the other end of the table, IOTA (MIOTA) leads the way down, falling by 3.40%, with STEPN (GMT) and 1inch Network (1INCH) down by 2.83% and 3.16%, respectively.

24-HourCrypto Liquidations Ease Back as Risk Aversion Subsides

Over 24 hours, total liquidations fell back during the Wednesday session, supported by a mid-session shift in risk appetite.

At the time of writing, 24-hour liquidations stood at $124.53 million, down from $154.14 million on Wednesday morning.

Liquidated traders over the last 24 hours also declined. At the time of writing, liquidated traders stood at 44,964 versus 49,758 on Wednesday morning. Liquidations were up over four hours and the final hour of the day (UTC) while down over 12 hours.

Crypto liquidations ease in a choppy session.
Total Crypto Liquidations 290922

According to Coinglass, 12-hour liquidations stood at $56.39 million, down from $86.08 million on Wednesday morning. However, four-hour liquidations were up from $4.38 million to $14.28 million, with one-hour liquidations up from $1.92 million to $3.06 million.

The chart below shows market conditions throughout the session.

Crypto market volatility hit by external market forces.
Total Market Cap 290922 Hourly Chart

 

BTC and ETH Hit Reverse ahead of Fed Chair Powell Powell Chatter

Key Insights:

  • Bitcoin (BTC) and ethereum (ETH) have had a bearish morning, with BTC at sub-$19,000 and ETH at sub-$1,300.
  • Risk aversion swept across the global financial markets as yet another US multinational sounded the alarm bells.
  • The technical indicators remain bearish, suggesting a possible return to 2022 lows.

On Tuesday, bitcoin (BTC) fell by 0.72%. Partially reversing a 2.22% rise from Monday, BTC ended the day at $19,097. While seeing red, BTC visited $20,000 for the first time in nine sessions.

A bullish morning saw BTC strike a mid-day high of $20,385. BTC broke through the First Major Resistance Level (R1) at $19,481 and the Second Major Resistance Level (R2) at $19,726.

However, coming up against the Third Major Resistance Level (R3) at $20,365, BTC tumbled to a late low of $18,838. Finding support at the First Major Support Level (S1) at $18,842, BTC ended the day at $19,097.

Ethereum (ETH) fell by 0.67% on Tuesday. Partially reversing a 3.24% gain from Monday, ETH ended the day at $1,328.

Tracking the broader market, ETH rallied to a mid-day high of $1,401. ETH broke through the First Major Resistance Level (R1) at $1,359 and the Second Major Resistance Level (R2) at $1,382.

However, the reversal saw ETH slide to a low of $1,304. Steering clear of the First Major Support Level (S1) at $1,296, ETH wrapped up the day at $1,328.

Risk Aversion Sweeps across the Equity and Crypto Markets

After decoupling from the NASDAQ 100 last week, the crypto market succumbed to external market forces on Tuesday. US consumer confidence jumped in September, giving the riskier assets a jolt. News of attacks on the Nord Stream gas pipeline added the market angst.

Things didn’t get better for riskier assets this morning, with Apple Inc. (AAPL) sending the riskier assets into negative territory.

Overnight, US tech giant and multinational Apple Inc. (AAPL) announced that it would drop plans to increase the production of its new iPhone 14 product suite, citing lackluster demand.

This morning, the NASDAQ 100 Mini was down 110.50 points.

Crypto market responds to Apple news.
Crypto Market Cap 280922 Hourly Chart

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.85% to $18,935. A mixed morning saw BTC rise to an early high of $19,245 before falling to a low of $18,478.

BTC tested the First Major Support Level (S1) at $18,495 before revisiting $19,100.

BTC under pressure.
BTCUSD 280922 Daily Chart

Technical Indicators

BTC needs to move through the $19,440 pivot to target the First Major Resistance Level (R1) at $20,042. A BTC move through $19,500 would support a bullish session.

In the case of another extended rally, BTC should test the Second Major Resistance Level (R2) at $20,987 and resistance at $21,000. The Third Major Resistance Level (R3) sits at $22,534.

Failure to move through the pivot would leave the First Major Support Level (S1) at $18,495 in play. Barring an extended sell-off, BTC should avoid sub-$18,000 and the Second Major Support Level (S2) at $17,893.

The Third Major Support Level (S3) sits at $16,346.

BTC support levels in play below the pivot.
BTCUSD 280922 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat below the 50-day EMA, currently at $19,278.

The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish price signals.

A move through the 50-day and 100-day ($19,549) EMAs would give the bulls a run at R1 ($20,042) and the 200-day EMA ($20,096). However, Tuesday’s slide through the 50-day EMA suggests a bearish afternoon session.

EMAs bearish.
BTCUSD 280922 4 Hourly Chart

Ethereum (ETH) Price Action

At the time of writing, ETH was down 2.68% to $1,292. A choppy morning saw ETH rise to an early high of $1,340 before sliding to a low of $1,254.

ETH fell through the First Major Support Level (S1) at $1,288 before revisiting $1,312.

ETH under pressure.
ETHUSD 280922 Daily Chart

Technical Indicators

ETH needs to move through the $1,344 pivot to target the First Major Resistance Level (R1) at $1,385 and the Tuesday high of $1,401. With no US economic indicators to consider, Fed Chair Powell could move the dial later today.

In the event of an extended rally, ETH could test the Second Major Resistance Level (R2) at $1,441 and resistance at $1,450. The Third Major Resistance Level (R3) sits at $1,538.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,288 in play. Barring an extended US session sell-off, ETH should avoid sub-$1,250 and the Second Major Support Level (S2) at $1,247.

The Third Major Support Level (S3) sits at $1,150.

ETH support levels in play below the pivot.
ETHUSD 280922 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 50-day EMA, currently at $1,345. The 50-day EMA slid back from the 100-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

An ETH breakout from the 50-day EMA ($1,345) would give the bulls a run at R1 ($1,385) and the 100-day EMA ($1,404). However, failure to move through the 50-day EMA would leave ETH under pressure near-term.

EMAs bearish.
ETHUSD 280922 4 Hourly Chart

Apple Inc. Joins Growing List Responding to Economic Conditions

Overnight, US tech giant and multinational Apple Inc. (AAPL) announced that it would drop plans to increase the production of its new iPhone 14 product suite.

Bloomberg reported that an expected surge in demand failed to materialize, forcing the company to notify suppliers to curtail efforts to increase assembly line output. Apple planned to increase production of the new iPhone 14 product suite by as much as 6 million units in the second half of this year.

Today’s news followed reports of Apple Inc. shifting some iPhone 14 production from China to India. According to Reuters, the shift from China was in response to rising geopolitical tensions and COVID-19 lockdown measures in China that continue to impact output.

The market reaction to the news was bearish. Ahead of the Bloomberg report, the NASDAQ 100 Mini was in positive territory. However, at the time of writing, the NASDAQ 100 Mini was down 142.25 points, with the Dow Jones Mini down 190 points. For the S&P 500, another bearish session would extend the losing streak to seven sessions.

Pre-market, Apple Inc was down 3.70%.

The European markets also responded adversely to the news. Early in the European session, the DAX30 was down 1.60%, with the CAC40 and the EuroStoxx600 down 1.24% and 1.43%, respectively.

Beyond the global equity markets, the crypto market reacted negatively to the news. This morning the crypto market cap was down $17 billion to $878.4 billion. Before the Apple news hit the wires, the crypto market cap had struck an early high of $902.2 billion.

Crypto market reacts to Apple Inc news.
Crypto Market Cap 280922 Daily Chart

Apple Joins Growing List of Multinationals to Sound the Alarm Bells

This morning’s news was one of several as US multinational companies respond to a marked shift in the economic environment. Economic indicators continue to flash red as central banks attempt to tame inflation.

Rising interest rates and persistent inflation amidst a weakening economic outlook have weighed on demand expectations.

In July, Walmart (WMT) spooked the global financial markets with a grim outlook for the quarter and the fullyear. However, shortly after the WMT warning, Apple Inc. and Amazon.com (AMZN) released earnings results and delivered positive outlooks, which were in stark contrast to that of Walmart.

Conditions have deteriorated rapidly since July, with Gap Inc. (GPS) pulling its full-year outlook in August, citing macroeconomic uncertainty as the company searched for a new CEO.

Earlier this month, FedEx (FDX) withdrew its earnings forecasts, citing deteriorating market conditions. FedEx shares tumbled by 21.44% in response to the announcement.

As the list grows longer, market angst will likely build as investors prepare for the earnings season, which kicks off next month.

DOGE and SHIB Hit Reverse as Apple Inc. Sends a Recession Warning

Key Insights:

  • Dogecoin (DOGE) and shiba inu coin (SHIB) joined the broader crypto market in negative territory this morning.
  • Network updates and crypto news took a back seat. News of Apple (AAPL) cutting back production of the new iPhone hit riskier assets.
  • The technical indicators are bearish, with DOGE and SHIB sitting below their 50-day EMAs, signaling a visit to the September lows.

On Tuesday, dogecoin (DOGE) fell by 1.02%. Following a 0.07% loss on Monday, DOGE ended the day at $0.060493. DOGE extended its current losing streak to four sessions.

A bullish start to the day saw DOGE strike a mid-morning high of $0.06307 before hitting reverse. DOGE broke through the First Major Resistance Level (R1) at $0.0621 to test the Second Major Resistance Level (R2) at $0.0630.

The reversal saw SOGE slide through the First Major Support Level at $0.0600 to a low of $0.05975 before a partial recovery to $0.06049.

Shiba Inu Coin (SHIB) bucked the broader market trend, ending the day flat. Following a 0.91% gain on Monday, SHIB ended the day at $0.00001112.

Tracking the broader market, SHIB rose to an early high of $0.00001155. SHIB broke through the First Major Resistance Level (R1) at $0.0000113 to test the Second Major Resistance Level (R2) at $0.0000115. The reversal saw SHIB slide to a low of $0.00001084.

However, finding support at the First Major Support Level (S1) at $0.0000109, SHIB ended the day at $0.0000112.

On Tuesday, bullish sentiment across the crypto market was short-lived, with US economic indicators weighing on riskier assets. A sharp rise in US consumer confidence, fueled by labor market conditions and wage growth, sent the Dow and the S&P500 into the red, with the crypto market in tow.

This morning, news of Apple Inc. (AAPL) cutting production of the new iPhone sent riskier assets into the red. Apple is the latest in a line of US multinationals reacting to economic conditions and preparing for a sharp decline in demand.

Dogecoin (DOGE) Price Action

At the time of writing, DOGE was down 1.55% to $0.05956. A mixed start to the day saw DOGE rise to an early high of $0.06097 before falling to a low of $0.05850.

DOGE fell through the First Major Support Level (S1) at $0.0591 before finding support.

DOGE under pressure.
DOGEUSD 280922 Daily Chart

Technical Indicators

DOGE needs to move through the $0.0611 pivot to target the First Major Resistance Level (R1) at $0.0625 and the Tuesday high of $0.06307. A marked shift in risk sentiment will be needed to support a return to $0.0620.

In the case of an extended crypto market rebound, DOGE should test the Second Major Resistance Level (R2) at $0.0644 before any pullback. The Third Major Resistance Level (R3) sits at $0.0677.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.0591 in play. However, barring another extended sell-off, DOGE should avoid sub-$0.0585 and the Second Major Support Level (S2) at $0.0578. The Third Major Support Level (S3) sits at $0.0545.

DOGE support levels in play below the pivot.
DOGEUSD 280922 Hourly Chart

The EMAs sent a bearish signal, with DOGE sitting below the 50-day EMA, currently at $0.06120. Today, the 50-day EMA fell back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish signals.

The failed bullish cross of the 50-day EMA through the 100-day EMA and DOGE slide through the 50-day EMA brings Sub-$0.590 into play. However, a move through the 50-day ($0.06120) and 100-day ($0.06133) EMAs would give the bulls a run at R1 ($0.625) and the 200-day EMA ($0.06260).

EMAs bearish.
DOGEUSD 280922 4 Hourly Chart

Shiba Inu Coin (SHIB) Price Action

At the time of writing, SHIB was down 1.62% to $0.00001094.

A choppy start to the day saw SHIB rise to an early high of $0.00001130 before sliding to a low of $0.00001072.

SHIB fell through the First Major Support Level (S1) at $0.0000108 before a return to $0.0000109.

SHIB under pressure.
SHIBUSD 280922 Daily Chart

Technical Indicators

SHIB needs to move through the $0.0000112 pivot to target the Firsts Major Resistance Level (R1) at $0.0000115 and the Tuesday high of $0.00001155. A marked shift in risk sentiment would be needed to support a breakout from the morning high of $0.00001130.

In the case of a broad-based crypto rebound, SHIB would likely test the Second Major Resistance Level (R2) at $0.0000119 and resistance at $0.0000120 before easing back. The Third Major Resistance Level (R3) at $0.0000126.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.0000108 in play. Barring an extended sell-off, SHIB should avoid sub-$0.0000105. The Second Major Support Level (S2) at $0.0000105 would likely limit the downside.

The Third Major Support Level (S3) sits at $0.0000098.

SHIB support levels in play.
SHIBUSD 280922 Hourly Chart

The EMAs send a bearish signal, with SHIB sitting below the 50-day EMA, currently at $0.00001118. This morning, the 50-day EMA slipped back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA. The signals were bearish.

A move through 50-day EMA ($0.00001118) would give the bulls a run at the 100-day EMA ($0.00001144) and R1 ($0.0000115). The 200-day EMA sits at $0.00001182. However, failure to move through the 50-day EMA ($0.00001118) would leave the support levels in play.

EMAs bearish.
SHIBUSD 280922 4 Hourly Chart

ADA Price Prediction: Bears Eye Sub-$0.420 on iPhone Production News

Key Insights:

  • On Tuesday, cardano (ADA) fell by 1.34% to end the session at $0.441.
  • US economic indicators refueled Fed fear, driven by a spike in consumer confidence that sent riskier assets into the red.
  • The technical indicators are bearish. With ADA sitting below the 50-day EMA, sub-$0.40 remains in play.

On Tuesday, ADA fell by 1.34%. Reversing a 0.22% gain from Monday, ADA ended the day at $0.441.

A bullish morning saw ADA rally to a mid-morning high of $0.463. ADA broke through the First Major Resistance Level (R1) at $0.453 and the Second Major Resistance Level (R2) at $0.459.

However, falling short of $0.465, ADA slid to a late afternoon low of $0.437. Finding support at the First Major Support Level (S1) at $0.439, ADA ended the day at $0.441.

US economic indicators overshadowed the likely positive impact of the Vasil hard fork on migration to the Cardano ecosystem.

ADA and the Crypto Market Still Intertwined with Stats and the Fed

After the post-Fed decoupling last Thursday, the US equity market influence returned on Tuesday. US economic indicators signaled further support for the Fed’s aggressive policy goals to bring inflation to target.

In September, the CB Consumer Confidence Index jumped from 103.6 to 108.0. Labor market conditions drove consumer sentiment northwards, offsetting concerns over inflation, mortgage rates, and Fed’s likely impact on the US economy.

Significantly, the pickup in confidence supports the Fed’s plans to lift rates on a steeper rate curve to tackle inflation. However, the survey cut-off was September 20, before the Fed rate hike and FOMC projections.

While US economic indicators weighed, network updates remain ADA positive. Investors expect improved network performance to drive Cardano adoption and a sizeable increase in project migration to the Cardano ecosystem.

Overnight, Input Output HK announced the availability of new post-Vasil hard fork capabilities, which were ADA positive.

ADA Price Action

This morning, ADA was down 2.72% to $0.429. A bearish morning saw ADA slide from an early high of $0.443 to a low of $0.425.

ADA fell through the First Major Support Level (S1) at $0.431. News of Apple Inc (AAPL) cutting production of the new iPhone weighed on riskier assets.

ADA under pressure.
ADAUSD 280922 Daily Chart

Technical Indicators

A move through S1 and the $0.447 pivot would give the bulls a run at the First Major Resistance Level (R1) at $0.457 and the Tuesday high of $0.463. A marked shift in risk sentiment would be needed to support a return to $0.460.

In the case of a breakout session, the Second Major Resistance Level (R2) at $0.473 would likely come into view. The Third Major Resistance Level (R3) sits at $0.499.

Failure to move through S1 and the pivot would leave the Second Major Support Level (S2) at $0.421 in play. However, barring an extended sell-off, ADA should avoid sub-$0.420. The Third Major Support Level (S3) sits at $0.395.

ADA support levels in play early.
ADAUSD 280922 Hourly Chart

This morning, the EMAs and the 4-hourly candlestick chart (below) sent a bearish signal.

ADA sat below the 50-day, currently at $0.453. The 50-day EMA fell back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMAs, delivering bearish signals.

An ADA move through the 50-day EMA ($0.453) would give the bulls a run at R1 ($0.457) and the 100-day EMA ($0.461). The 200-day EMA sits at $0.469. However, following Tuesday’s fall through the 50-day EMA, ADA would likely test S2 ($0.421) before any recovery.

EMAs bearish.
ADAUSD 280922 4-Hourly Chart

S&P 500 (SPY) Remains Under Pressure At The Start Of The Week

Key Insights

  • The stock market is falling as traders sell riskier assets amid recession worries.
  • Strong dollar and rising Treasury yields serve as additional bearish catalysts for stocks. 
  • The pullback is broad, and all market segments are under pressure. 

S&P 500 Retreats As U.S. Dollar Tests New Highs

S&P 500 continues its attempts to settle below the support level at 3660 as traders move out of riskier assets.

Treasury yields are testing new highs. Currently, the yield of 10-year Treasuries is trying to settle above the 3.85% level. At the start of August, 10-year Treasuries yielded just 2.60%, so the recent upside move was huge.

Higher Treasury yields put significant pressure on REITs. Kimco Realty, Ventas, Prologis, and Vornado Realty are among the biggest losers in the S&P 500 today.

Energy stocks have also found themselves under pressure as WTI oil tested new lows. Baker Hughes, Hess, and Halliburton are down by more than 3% in today’s trading session.

Some tech stocks, like Apple and Amazon, are trying to rebound today. Other tech stocks, which have been weak in recent weeks, continue to move lower. Meta and NVIDIA are testing new lows.

It should be noted that strong dollar also serves as a negative catalyst for U.S. stocks by making them more expensive for foreign investors. Today, the U.S. Dollar Index tested highs that were last seen back in 2002. Dollar’s strength highlights the global flight to safety, which is bearish for riskier assets like stocks.

S&P 500 Tries To Settle Below The Support Level At 3660

S&P 500

From a technical point of view, RSI has recently entered into the oversold territory, so the risks of a rebound are increasing. This year, RSI has been at current levels in late January, after the strong pullback.

This time, the panic looks strong, so RSI may move to lower levels without a rebound. It remains to be seen whether the market is ready for a flash sell-off, which happened during the coronavirus crisis. However, the current pullback is broad, and the recent moves in currency markets show that investors are very nervous.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Poised to Break into Bear Market Territory; Weaker Dollar Key to Turning Stockmarket Around

U.S. stock index futures are edging lower on Monday, shortly before the cash market opening as traders brace for more selling pressure. The weakness is being fueled by worries that the Federal Reserve’s aggressive push to curb inflation may tip the American economy into recession.

At 12:23 GMT, the blue chip Dow Jones Industrial Average is trading 29462.00, down 207.00 or -0.70%. The benchmark S&P 500 Index is at 3678.15, down 30.25 or -0.82% and the tech-heavy NASDAQ Composite is at 11296.15, down 80.00 or -0.70%.

Weakening investor sentiment is being fueled by surging global interest rates and turmoil in the foreign currency markets.

S&P 500 Breathing on Bear Market Low

In the cash market, investors will be closely watching the S&P 500 for any break below its bear market low. The S&P’s low close for the year in June was 3,666.77. It closed Friday at 3,693.23 after trading briefly below that close. The benchmark’s intraday low for the year is 3636.87. Any trade below those levels could drive more selling in the market.

Tumultuous Forex Trade Could Create Havoc for Stocks

The British Pound plunged to a record low on Monday against the U.S. Dollar. Sterling at one point fell to an all-time low of $1.0382. The move is being fueled by a combination of the Federal Reserve’s aggressive hiking campaign and last week’s announcement by the new U.K. government that it would implement tax cuts and investment incentives to boost growth.

The consensus doesn’t believe there will be a currency intervention on the Sterling, but the onus is now on the central bank to do more to tight policies to stabilize the British Pound.

Unless there is severe financial distress due to the weakening currency, the Bank of England will wait until its next meeting to show decisive action to raise rates aggressively in the next couple of meetings.

Cyclical Stocks Trading Lower on Worries Over Fed-Driven Recession

In premarket trading on Monday, cyclical stocks traded convincingly lower on worries that a series of sharp interest rate hikes by the Fed could rattle the economy.

Boeing Co, Chevron Corp, Caterpillar Inc and JPMorgan Chase & Co fell more than 1% each, while growth stocks including Apple Inc, Microsoft Corp, Amazon.com Inc and Tesla Inc shed between 0.4% and 0.5%.

Short-Term Outlook

Going into today’s trading session, I believe investors should be focused on the U.S. Dollar. It’s hard not to have concerns about long-term stock market performance with the dollar accelerating, global yields soaring and the breakdowns across the global FX.

However, a concerted effort by the major central banks to bring the U.S. Dollar could trigger a dramatic reversal in equity prices.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 (SPY) Dives Below 3800 As Powell Wants To Put Pressure On Demand

Key Insights

  • S&P 500 finished the trading session below the 3800 level as Powell said that the Fed would work to moderate demand in order to fight inflation. 
  • The pullback was broad as traders rushed out of riskier assets. 
  • However, some consumer defensive stocks managed to gain ground in today’s trading session. 

The Fed Stays Focused On Inflation

S&P 500 declined by 1.7% in a volatile trading session after the Fed increased the interest rate by 75 bps.

Fed’s message was hawkish. The Fed raised the median federal funds rate projection to 4.6% in 2023. During the press conference, Fed Chair Jerome Powell highlighted the importance of pushing inflation back towards the 2% level.

Interestingly, S&P 500 made an attempt to settle above the 3900 level during Powell’s conference. However, stocks quickly lost momentum, and S&P 500 declined to 3790.

Powell said that higher inflation presented a bigger problem than the slowdown of the economy and potential layoffs. Powell said that the labor market was too tight and needed to be more balanced.

The pullback was broad as Fed’s efforts to cool demand will hurt all industries. Leasure and entertainment stocks were hurt the most. Caesars Entertainment, Las Vegas Sands, Carnival Corporation and Wynn Resorts were among the biggest losers.

Leading tech stocks have also found themselves under material pressure. Apple, Amazon, Tesla, and Meta were down by 2-3% in today’s trading session.

Some consumer defensive stocks, like General Mills, Kellogg, Campbell Soup, and Kraft Heinz enjoyed support today. Traders tried to find safe-haven assets in today’s market and focused on companies that produce basic products. It remains to be seen whether these stocks will continue to move higher in the upcoming trading sessions.

A Move Below 3780 Will Push S&P 500 Towards The Support At 3750

S&P 500

S&P 500 settled below the 3800 level and finished the day near 3790. After the market close, it is trying to settle below the support at 3780.

If this attempt is successful, S&P 500 will head towards the next support level, which is located at 3750. A move below this level will push S&P 500 towards the support at 3725. If S&P 500 gets below 3725, it will head towards the next support at 3700.

On the upside, the previous support at 3800 will serve as the first resistance for S&P 500. If S&P 500 manages to settle back above this level, it will head towards the resistance at 3825. A move above 3825 will push S&P 500 towards the resistance at 3850.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 (SPY) Tests Support At 3850

Key Insights

  • S&P 500 is moving lower as Treasury yields are testing new highs. 
  • Traders remain nervous ahead of the Fed Interest Rate Decision. 
  • A move below the support at 3850 will push S&P 500 towards the next support level at 3825.

Ford Retreats As Traders Fear That Guidance Will Be Cut

S&P 500 declined towards the 3850 level as traders sold stocks ahead of the Fed Interest Rate Decision, which will be released tomorrow.

Ford declined by more than 10% in today’s trading session after the company revealed that it faced parts shortages. According to Ford, the company “expects to have about 40,000 to 45,000 vehicles in inventory at end of third quarter lacking certain parts presently in short supply”. Ford reaffirmed its full-year adjusted EBIT guidance of $11.5 billion – $12.5 billion. However, the market is worried that the company will be forced to cut its guidance in the upcoming months.

Gold stocks have found themselves under material pressure as gold markets moved closer to yearly lows. One of the leading gold stocks, Newmont Corporation, declined by more than 4% in today’s trading.

Energy stocks are also moving lower as WTI oil managed to get below the $84 level. Exxon Mobil, Chevron, and Schlumberger are down by more than 1%.

Leading tech stocks are mostly moving lower. However, Apple and Tesla are up by more than 1%.

From a big picture point of view, the current pullback is broad, and all market segments are under pressure. Traders reduce their risks ahead of the Fed Interest Rate Decision as they are worried that a 75 bps rate hike may be accompanied by hawkish commentary from Fed Chair Jerome Powell. Bond traders also fear that Powell will be hawkish, so Treasury yields test new highs.

Another Test Of The Key Support At 3850

S&P 500

S&P 500 continues its attempts to settle below the strong support level at 3850. If S&P 500 settles below this level, it will move towards the next support at 3825. A move below the support at 3825 will push S&P 500 towards the support at 3800. In case S&P 500 declines below 3800, it will head towards the next support level, which is located at 3780.

On the upside, S&P 500 needs to settle above the resistance at 3885 to have a chance to gain upside momentum in the near term. The next resistance level is located at 3900. A successful test of this level will open the way to the test of the next resistance at 3920.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 (SPY) Remains Mixed In Choppy Trading

Key Insights

  • Stocks are swinging between gains and losses at the start of the week. 
  • Healthcare stocks got hit after Joe Biden declared that pandemic was over. 
  • Energy stocks rebound from session lows as oil markets recover after sell-off. 

Healthcare Stocks Dive After Biden’s Comments On The Pandemic

S&P 500 continues its attempts to settle below 3850 as Treasury yields keep moving higher ahead of the Fed Interest Rate Decision. Traders prepare for an aggressive Fed, and the yield of 2-year Treasuries is trying to settle above the 3.95% level.

It should be noted that today’s pullback is not broad. Healthcare stocks are the worst performers today as U.S. President Joe Biden said that pandemic was over. Moderna stock was down by almost 10% while Pfizer lost 2% in today’s trading.

Big tech stocks show mixed performance. Apple rebounds after the recent setll-off, while Microsoft is testing new lows.

Energy stocks rebounded from session lows together with oil markets. However, leading energy stocks like Exxon Mobil and Chevron have not managed to get back to the positive territory.

Trading will likely remain nervous ahead of the Fed decision. Markets have probably priced in a 75 bps rate hike, and the key question is whether Fed Chair Jerome Powell sends a hawkish signal.

At this point, traders are worried that aggressive rate hikes will push the economy into a real recession, which is accompanied by job losses and reduced profits for corporations. In this light, the market will be extremely sensitive to Powell’s comments.

Support At 3850 Stays Strong

S&P 500

S&P 500 settled below the 3885 level and continues to test the support at 3850. RSI remains in the positive territory, so there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

If S&P 500 mananges to settle below 3850, it will head towards the next support level at 3825. A successful test of this level will open the way to the test of the next support at 3800.

On the upside, the nearest resistance level for S&P 500 is located at 3885. If S&P 500 climbs back above this level, it will head towards the next resistance at 3900. A move above 3900 will push S&P 500 towards the resistance at 3920.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 (SPY) Declines Towards 3900 As Treasury Yields Rise

Key Insights

  • Higher Treasury yields put material pressure on stocks today. 
  • Energy stocks declined amid a strong sell-off in the oil and natural gas markets. 
  • A move below 3900 will push S&P 500 towards the support at 3885.

S&P 500 Is Moving Towards September Lows

S&P 500 is losing ground today as Treasury yields continue to move higher ahead of the Fed Interest Rate Decision, which will be released on September 21.

Energy stocks have found themselves under pressure amid sell-offs in the natural gas and oil markets. As a result, leading energy stocks like Exxon Mobil and Chevron are down by about 2% in today’s trading.

Leading tech stocks, including Apple, Microsoft, Alphabet, and Amazon, are also down by 1-2% today. NVIDIA is testing new lows. Higher interest rates are bearish for tech stocks.

From a big picture point of view, traders remain worried that Fed will hurt economic growth by raising rates aggressively. The FedWatch Tool indicates that there is a 60.2% probability that Fed’s target rate will reach 375-400 bps in November, up from the current 225 – 250 bps.

Aggressive rate hikes may put significant pressure on economic activity and hurt companies’ profits, so it’s not surprising to see that traders are worried about this scenario.

S&P 500 Is Ready To Test The Support Level At 3900

S&P 500

S&P 500 managed to get below the support level at 3920 and is trying to get to the test of the next support, which is located at 3900. If S&P 500 manages to settle below this level, it will head towards the support at the recent lows at 3885. A successful test of the support at 3885 will push S&P 500 towards the support at 3850.

On the upside, the previous support level at 3920 will serve as the first resistance level for S&P 500. In case S&P 500 manages to settle above this level, it will head towards the resistance at 3950. A move above the resistance at 3950 will open the way to the test of the next resistance level at 3980.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 (SPY) Rebounds As Buyers Emerge After Sell-Off

Key Insights

  • Traders buy stocks after yesterday’s major pullback, but some market segments remain under pressure. 
  • Energy stocks enjoy strong support today as energy markets continue to rebound. 
  • A move above 3950 will push S&P 500 towards the resistance at 3980.

Stocks Rebound After Yesterday’s Sell-Off

S&P 500 moved towards the 3950 level as stocks rebounded after yesterday’s huge pullback.

Today’s PPI report, which showed that PPI declined by 0.1% month-over-month in August, provided some support to stocks today. However, it should be noted that Core PPI increased by 0.4% month-over-month, compared to analyst consensus of 0.3%, as inflationary pressure remained strong.

Treasury yields tested new highs today, and the yield of 10-year Treasuries made an attempt to settle above 3.80%. Treasury yields keep moving higher as traders bet that Fed will be forced to raise rates aggressively, which could ultimately put more pressure on tech stocks.

Today, leading tech stocks are trying to rebound after yesterday’s nightmare. Tesla is up by 4%, while Apple is gaining 1%. Meta remains under strong pressure and is testing yearly lows, trying to settle below the $150 level.

Energy stocks outperform other market segments as WTI oil continues to rebound. Schlumberger is up by 4%, while Exxon Mobil is gaining 3% in today’s trading.

It should be noted that today’s rebound is not broad. The real estate segment is under notable pressure due to rising Treasury yields. The basic materials segment is also moving lower. For example, shares of the leading copper producer Freeport-McMoRan are down by 3.5% today.

Today’s trading action shows that traders remain nervous after yesterday’s sell-off. Hawkish Fed is the main risk for markets, so trading will likely stay choppy until the Fed Interest Rate Decision, which will be released on September 21.

S&P 500 Tries To Settle Above 3950

S&P 500

S&P 500 is currently trying to settle above the resistance at the 3950 level. In case this attempt is successful, S&P 500 will move towards the next resistance level, which is located at 3980. A move above this level will push S&P 500 towards the resistance at 4000.

On the support side, the nearest support level for S&P 500 is located at the recent lows at 3920. If S&P 500 manages to settle below this level, it will head towards the next support at 3900. A successful test of this level will open the way to the test of the support at 3885.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 (SPY) Set For A Sell-Off After Shocking Inflation Data

Key Insights

  • U.S. inflation data shocked markets. 
  • S&P 500 futures are under significant pressure in premarket trading. 
  • A move below 4015 will push S&P 500 towards the 4000 level. 

Inflation Data Puts Heavy Pressure On Stocks

S&P 500 futures are down by 2.4% in premarket trading after the release of U.S. inflation reports.

The reports indicated that Inflation Rate increased by 8.3% year-over-year in August, compared to analyst consensus of 8.1%. Core Inflation Rate grew by 0.6% month-over-month, while analysts expected that it would increase by just 0.3%.

Markets were shocked by inflation data as many traders believed that lower oil prices would put more pressure on inflation. Expectations for the upcoming Fed meeting changed dramatically. The FedWatch Tool indicates that there is a 90% probability of a 75 bps rate hike at the next meeting, and there is a 10% probability of a shocking 100 bps rate hike.

Not surprisingly, the U.S. dollar rallied after the release of inflation reports. Treasury yields moved to new highs. Currently, the yield of 2-year Treasuries is trying to settle above the 3.70% level.

Higher inflation and rising Treasury yields will put material pressure on tech stocks in today’s trading. Leading tech stocks like Apple, Microsoft, Alphabet, and Amazon are down by 2-3% in premarket trading.

The sell-off may be broad today as S&P 500 enjoyed a strong rally in recent trading sessions, and it remains to be seen whether any market segment will get support from traders.

S&P 500 Futures Moved Below The 50 EMA

S&P 500

S&P 500 futures managed to get below the 50 EMA at 4050 and are moving towards the support at 4015. In case S&P 500 manages to settle below this level, it will head towards the next support, which is located at 4000. A move below this level will push S&P 500 towards the support at 3980.

On the upside, S&P 500 needs to get back above the 50 EMA to have a chance to gain upside momentum in the near term. The next resistance level for S&P 500 is located at 4080. If S&P 500 settles back above this level, it will head towards the resistance at 4100.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 (SPY) Tests 4100 As Commodity Markets Rally

Key Insights

  • S&P 500 is up by almost 1% today amid growing appetite for risk.  
  • Silver-related stocks enjoy strong support as silver is testing the $20.00 level. 
  • A move above 4115 will push S&P 500 towards the resistance at 4150.

Traders Stay Optimistic

S&P 500 continues its attempts to settle above the 4100 level as the strong rebound continues.

S&P 500 faced resistance near 4115 and pulled back towards the 4100 level, but there are no signs of a serious sell-off, which could be triggered by profit-taking after the strong rally.

While the markets have priced in an almost 90% probability of a 75 bps rate hike at the next Fed meeting, stock traders remain in a bullish mood. Treasury yields are mostly unchanged today, but weaker dollar provides additional support to stocks.

S&P 500

S&P 500 is trying to settle back above the 4100 level. In case this attempt is successful, it will move towards the next resistance level, which is located near daily highs at 4115. A move above 4115 will push S&P 500 towards the resistance at 4150. If S&P 500 gets above this level, it will head towards the resistance at 4180.

On the support side, a move below the 4100 level will open the way to the test of the support at 4080. In case S&P 500 manages to settle back below this level, it will head towards the next support at the 50 EMA at 4050.

Commodity-Related Stocks Rally

Commodity-related stocks enjoy strong support at the start of the week as commodity markets rally.

Silver miners like First Majestic Silver, Endeavour Silver, and Pan American Silver, are up by 5-7% in today’s trading.

Major oil-related stocks like Exxon Mobil and Schlumberger are also gaining ground as WTI oil is up by more than 2%.

Leading tech stocks are mostly moving higher in today’s trading. Apple is the clear leader as the stock is up by more than 3% amid reports about strong pre-order demand for iPhone 14.

From a big picture point of view, the current upside move is broad, and all market segments are moving higher. While S&P 500 is up by about 5% in just four trading sessions, traders’ appetite for risk remains strong.

Traders will need to monitor the developments in currency markets today as the weak dollar provides significant support to S&P 500. In case the U.S. Dollar Index manages to settle below the 108 level, stocks will have a good chance to finish the trading session near daily highs.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 (SPY) Tries To Gain More Ground Despite Powell’s Comments

Key Insights

  • Hawkish commentary from Fed Chair Powell put some pressure on leading tech stocks. 
  • Healthcare and financial stocks enjoy strong support today. 
  • S&P 500 needs to settle above 4015 to continue its rebound.

S&P 500 Tries To Continue Its Rebound

S&P 500 is swinging between gains and losses today as leading tech stocks have once again found themselves under pressure. Apple, Alphabet, Amazon are down by about 1%.

Today, traders focused on the hawkish comments from Fed Chair Jerome Powell, who highlighted the importance of Fed’s fight against inflation. Treasury yields moved higher, which was bearish for growth stocks and put some pressure on S&P 500.

At the same time, it should be noted that demand for stocks is visible in the healthcare and financial segments. For example, big banks like JP Morgan, Citigroup, Morgan Stanley are up by about 2% today.

S&P 500

S&P 500 failed to settle above the 4000 level and pulled back. Currently, S&P 500 has settled between the support at 3950 and the resistance at 3980. In case S&P 500 declines below the 3950 level, it will gain additional downside momentum and move towards the next support level at 3915.

On the upside, S&P 500 must settle above 4015 to have a chance to gain sustainable upside momentum. A move above 4015 will open the way to the test of the next resistance level at the 20 EMA at 4035.

Snap Rallies As Memo Highlights Growth Ambitions

Snap is up by more than 7% today as traders react to the internal memo that was sent by the company’s CEO Evan Spiegel. According to the memo, the company plans to grow the user base to 450 million by the end of the next year.

Gamestop has also enjoyed some support today and made an attempt to settle above the $26 level after the company revealed its new partership with the crypto exchange FTX. Gamestop stock has been under serious pressure in recent weeks, and it remains to be seen whether the new crypto partnership will boost interest in the meme stock.

From a big picture point of view, the market needs additional catalysts to continue its rebound. Most likely, trading will remain highly volatile ahead of the Fed decision, which will be released on September 21. While traders look ready to buy stocks after the major pullback, the hawkish Fed may limit their appetite for risk.

For a look at all of today’s economic events, check out our economic calendar.