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On Wednesday, the Federal Reserve announced an interest rate increase in line with expectations. All three major U.S. indices sold off following the announcement and closed with nearly identical 1.6% losses. The quarter-point hike was made to balance concerns over inflation and bank turmoil, but investors were spooked by comments from Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen about the state of the banking sector.
Chairman Powell acknowledged the turmoil in the U.S. banking sector, stating that the issues were limited to a few banks and that the broader financial system was “sound and resilient.” However, both Powell and Yellen stopped short of guaranteeing that all depositors would be saved in the event of further bank failures; these comments caused a dip in the stock market, which had been anticipating an interest rate increase. The Central Bank hinted that regular rate hikes could be coming to an end by removing a line from its policy statement about “ongoing increases.” Fed officials also revised their economic growth forecast downwards for 2023 compared to last year’s projection.
Investors will be keeping a close eye on earnings reports this week from companies such as Nike and Chewy, as well as liquidity issues in regional and global banks, and the Federal Reserve’s decision to influence markets. The VIX is currently trading near $22, while support for the SPY is at $392, followed by $384; overhead resistance levels are at $402 and $408. We still believe the market will trade sideways for the next two to eight weeks and recommend subscribers hedge their positions. We remain presently bearish on the market due to recent developments and advise exercising caution. Market commentary readers should maintain clearly defined stop levels for all positions. For reference, the SPY Seasonal Chart is shown below:
Note: The Vector column calculates the change of the Forecasted Average Price for the next trading session relative to the average of actual prices for the last trading session. The column shows the expected average price movement “Up or Down”, in percent. Trend traders should trade along the predicted direction of the Vector. The higher the value of the Vector the higher its momentum.
*Please note: At the time of publication Vlad Karpel does have a position in the featured symbol, slv. Our featured symbol is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his money in paid subscription services. If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, or MonthlyTrader recommendations. If you are interested in receiving Vlad’s picks, please click here.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $69.92 per barrel, up 0.36%, at the time of publication.
Looking at USO, a crude oil tracker, our 10-day prediction model shows mixed signals. The fund is trading at $59.79 at the time of publication. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The price for the Gold Continuous Contract (GC00) is up 1.66% at $1973.40 at the time of publication.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mixed signals. The gold proxy is trading at $183.84 at the time of publication. Vector signals show +1.07% for today. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The yield on the 10-year Treasury note is down at 3.444% at the time of publication.
The yield on the 30-year Treasury note is down at 3.655% at the time of publication.
Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see mixed signals in our 10-day prediction window. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The CBOE Volatility Index (^VIX) is $26.52 at the time of publication, and our 10-day prediction window shows mixed signals. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
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