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After rapidly fluctuating throughout the day, American stocks closed lower on Wednesday as the Federal Reserve proclaimed another rate hike and plans for additional hikes which were higher than what investors had initially predicted. In the afternoon, the Federal Reserve officially announced it will be raising policy interest rate by .75% to a target range of 3%-3.25%. They also estimate that there will be another 1.25% in rate hikes by the end of this year, which would bring the benchmark rates up to 4.4% from 3.8%. The Fed has downgraded its growth projections, predicting the economy will expand at a sluggish 0.2% annual rate this year and 1.2% in 2022, far below the 5.7% gain in 2021. The unemployment rate is projected to rise as high as 4.4% next year and stay at that rate for the following year as well. This shook indicies in the late afternoon to ultimately close lower.
Markets were also pressured on Wednesday by news that Russian president Vladimir Putin had called for a partial military mobilization of the country to prosecute his attack on Ukraine. The public statement sparked concern of a further escalation in the war, as well as possible threats against Western countries. This, along with the COVID shutdowns in China, are impacting global markets this week and are key point of interest going forward. Globally, Asian markets closed in the red while European markets finished higher. Commodities traded to mixed results with gold moving higher while oil slipped significantly; the energy sector saw added while precious metals traded in the green.
Earnings season is also set to pick up with $COST and $LEN releasing earnings, as well as a larger slate next week. We are watching the overhead resistance levels in the SPY, which are presently at $390 and then $404. The $SPY support is at $380 and then $370. We expect the market to continue the current pullback for the next 2-8 weeks. Short term market is oversold and can stage a multiple weeks rally. 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, noc. 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 $83.04 per barrel, down 1.67%, 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 $72.01 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 0.67% at $1682.30 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 $158.54 at the time of publication. Vector signals show +0.31% 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 3.531% at the time of publication.
The yield on the 30-year Treasury note is down, at 3.504% 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 $26.16 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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