No hike in FOMC news was sold, yet S&P 500 managed to recover around two-thirds of the initial decline – driven chiefly by tech. The downside though continues in the premarket session, making it reasonable to evaluate the odds of an intraday reversal higher leading to a good retracement.

While ECB is expected to tighten by 25bp, Germany slipped into recession already. Retail sales aren‘t likely to be met with cheering – not even nominal ones. Same-store sales view isn‘t encouraging, and in real terms, retail sales are down 4% YoY already. Unemployment claims won‘t paint a picture of growth strength in the real economy either.

So, less bad than feared can be the only catalyst – coupled with a more wait-and-see ECB press conference stance leading to one more buy-the-dip reaction (led of course by tech, communications, and discretionaries, with ideal financials, industrials, materials, retail and small caps with perhaps a little energy joining in).

The dreaded R word (recession) isn‘t yet thrown around, but that would change over the next up to two months. For now, it‘s still reasonable to expect ES September contract to make a push above 4,440, but the upswing‘s remaining time can be probably measured in weeks (around 1, max 2) as real assets aren‘t cratering (it‘s normal for PMs to decline on a „tightening surprise“) and USD isn‘t truly rising against euro.

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Let‘s move right into the charts (all courtesy of www.stockcharts.com).
 

S&P 500 and Nasdaq Outlook

ES broke below 4,410, but I don‘t think 4,380 would be broken today – either late today or during tomorrow‘s quad witching. Till Monday, return to 4,420 is likely unless tech disappoints tomorrow – and market breadth is setting stocks up for a stabilizing rebound Friday.

FOMC delivered shot across the bow, but I don‘t think we have seen the top – we‘re approaching it, but not yet there – later next week is a better candidate for that than this one.
 

Gold, Silver, and Miners

PMs correction hasn‘t yet run its course in time, and $1,930 and $23.15 as first serious support levels still loom, no matter relative copper resilience (which is also making a case against panic in stocks right now).

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