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Following a five-day losing streak, the Dow and S&P 500 rise following the largest interest rate increase since 1994. The Nasdaq also finished higher, booking the biggest gain of all three major U.S. indices at 2.5%. The Federal Reserve’s latest outlook has changed slightly, with the rate they expect to reach by the end of this year rising to around 3.4 percent and ending 2023 at around 3.8 percent. The 75-point rate hike did not come as a surprise following last week’s underwhelming inflation data, which Fed Chair Jerome Powell addressed. Powell said the Fed isn’t attempting to induce a recession, but that certain elements of the unexpectedly robust May consumer-price inflation numbers, which were released on Friday, are beyond its control. The May reading soured sentiment and provided a clear obstacle to those who believed that the price rises had come to an end. It also sparked another stock market and another asset rout, sending the S&P 500 index into bear territory for the first time this year. Additional economic reports coming in today included retail data. U.S. retail sales dropped 0.3% in May, below expectations, while sales minus automobiles increased 0.5%. However, automobile and petrol sales rose 0.1%.
U.S. Treasury yields and oil futures pulled back following the announcement while gold traded higher. The dollar dipped slightly and the crypto market continued to see massive selloffs. The $VIX is trading near the 35 level. The $ADBE, $ORCL, and $KR earnings this week, and reaction to today’s Fed decision can influence the next move in the market. We are watching the overhead resistance levels in the SPY, which are presently at $380 and then $396. The $SPY support is at $372 and then $360. We expect the market to start the bottoming process this week. In the short term, the market is extremely oversold and due for a rebound in the next few sessions. Globally, European markets traded higher while Asian markets saw mixed results. We encourage all market commentary readers to 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, QQQ. 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 $115.83 per barrel, down 2.61%, 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 $86.93 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 1.25% at $1836.10 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 $170.77 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 3.289% at the time of publication.
The yield on the 30-year Treasury note is down, at 3.333% 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 $29.62 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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