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Wednesday’s stock market began on the rise, but after the Federal Reserve announced its decision to raise interest rates by 0.5%, stocks tumbled and ended in negative territory. After four successive increases of three-quarters percentage points each, the central bank’s most recent hike is more moderate. The move was made to try and contain inflation which had been reaching rapidly increasing levels throughout the year. The Federal Reserve is poised to raise interest rates soon, as indicated by the “dot plot” projections of its officials. Expectations are that the federal-funds rate will exceed 5% in 2023 and remain at this elevated level for an extended period. The Federal Reserve took note of the higher rates’ capacity to further restrain economic demand and inflation. Moreover, they made it clear that their intention is not to place the economy in a more severe recession than a mild one. However, the dot plots demonstrate that if inflation fails to abate and remains above 2%, then the Federal Reserve is likely to fall short of its goals.
On Tuesday, newly released economic figures revealed an increase of 7.7% in prices on a year-over-year basis in November, which is much lower than the 9% peak this summer. These rate increases are designed to reduce demand and therefore aid with decreasing costs as well. With inflation subsiding, the Federal Reserve has decided against making further hikes at this time. The $ORCL, $ADBE, and $COUP earnings this week – as well as CPI data and Fed decision- are influencing the next move in the market. We are watching the overhead resistance levels in the SPY, which are presently at $400 and then $410. The $SPY support is at $390 and then $385. We expect the market to continue building a market top for the next 2-4 weeks. The short-term market is trading in the well-defined range. We would be market neutral at this time and encourages subscribers not to chase the market to the downside or upside. Globally, Asian markets traded higher while European markets closed in the red. 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, PSQ. 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 $77.36 per barrel, up 0.10%, 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 $69.84 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 down 0.02% at $1818.40 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 $167.26 at the time of publication. Vector signals show -0.17% 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 3.479% at the time of publication.
The yield on the 30-year Treasury note is down at 3.536% 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 $20.75 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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