Stocks Edge Lower Ahead of FOMC
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Stocks dipped further into negative territory as we antipated yesterday. The S&P 500 briefly dipped into the vacuum zone we identified between 4632 and 4580, but it was able to recover quickly, and is currently clinging to support at 4632. We are seeing several green triangles on the KRI, suggesting support is forming. We anticipate stocks to range a bit before the FOMC and from there, we will see how the markets interpret the data. Some hawkishness is expected, with persistent inflation putting the Fed in a difficult spot. If they come out more hawkish than expected, we could easy punch through the vacuum zone to 4580 or below. If they are less hawkish than expected, or even dovish, then we could recover highs. It is doubtful that we will make new highs today, but the next target is 4763.
Nota
Stocks dipping lower ahead of the FOMC. We have just broken into the vacuum zone down to 4580, but we appear to be finding support just below it, which may signal the formation of a new technical level...Nota
Boom! Relief rally as the FOMC minutes were within investors' expectations. We were pricing in higher rates (2022) and more aggressive tapering, and that is exactly what we got! Expect stocks to rally for a bit, perhaps not to new highs, but we should be in the clear from that vacuum zone to 4580.
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