Fed meeting Wednesday. Here's a clue.
The S&P 500 is on the edge of a cliff. Let's see if Powell gives it a push.
There’s an old line from the comedy classic “Friends” where the character Chandler, in a reference to computer system used at work, says with panic, “I’m looking at the wenus, and its not happy!”
The same can be said for the current picture of the S&P 500. With Fed day coming Wednesday, one key factor in assessing reward and risk around “events” like Powell’s 2:30 press conference is checking what market conditions are leading into the event. What I see here that puts me in “a take low risk” stance, as I have been much of the year:
See those red arrows. There are 21 of them. Each one is a failed rally attempt to regain 2022’s high level around 4,800. That’s not a bull market.
Price is peeling off of the purple line, and as it creates more space under it, that’s a signal that sellers are starting to dominate buyers. Translation: downward price pressure for S&P 500.
The underlying breath of the stock market continues to be terrible. I go looking for market segments that are more than a swing trade. Can’t find them.
So, Powell and his crew might be able to stoke early holiday joy from the stock market. But if that doesn’t happen soon, the so-called path of least resistance leans lower. As always, any investment can go up at any time, and we can’t predict that. But we CAN identify when risk of major loss is high. And right now, its pretty darn high.
