Fairly mundane pre-FOMC activity controlled defensive Tuesday behavior.

Freepik

At the same time there was so signification deviation from the shuffling near the S&P's 50-Day Moving Average, which leaves variable prospects for that Senior Index, after we see what the Fed has to say this week.

I think the Street's view is similar to what Goldman Sachs said today about a Fed move. Their chief US economist (David Mericle) wrote in a research note previewing the FOMC. "The immediate question for markets is whether the median dot will continue to project an additional hike this year to 5.5-5.75%, presumably in November. We think that it will, but only by a narrow majority, and in part for the strategic purpose of preserving flexibility."

This fairly represents the muddled viewpoint where the Fed hasn't achieved a remotely accurate disinflation trend, much less to a 2% inflation pace. The risk is that economists and Fedheads actually think they are helping negate price rises, when that was the case while they were too low for too long, but not in a situation of nearly $90 / bbl Oil and climate-change related poor crops. Much if not most could not be directly impacted by tighter money. They worsened it.

Liquidity seems to be sufficient to hold most prices together, though again not particularly stimulating, nor should one expect it to be given how repressed at least the majority of the market is, while the mega-caps remain extended, with here-and-there an air-pocket decline reminding everyone what controls S&P, as well as the NDX. Clearly there's more room on the downside that upside.

At the same time there remain more 'landmines than goldmines', it's worth a mention of money managers and hedgers trying to 'cherry-pick' occasionally wounded stocks, for which analysts believe business models for 2024 remain in, or will likely be, in decent shape. That's of course subjective and with those companies making positive cash flow or earnings, requires discounting future prospects with expectations that can be rewarded, discarded, or mitigated.

Market 'X'-Ray

Can't find anything 'impressive', as doctors would say.

Tuesday was truly a mixed meandering affair, which did recover somewhat as earlier video suggested, but nothing matters much until we hear from FOMC.

Stronger Oil and stronger Dollar often are harbingers of market problems, as well as lower S&P and continued inflation. So we'll see. But very near-term, 'if' the Fed is perceived as dovish in what will be accompanied by hawkish talk...well...that's the Fed talking tough because inflation data hasn't cooled and it's not due to their policies, so maybe that will be their rationale to stay calm.

The market is sort of holding together with mixed-risk interpretations. I sort of like that because it confounds some computer-driven systems that don't take full measure of the market-sector bifurcation...or factor in global growth.

That global growth issue, especially as relates to China, is worth pondering. I speculated yesterday that China was building their own Strategic Oil Reserve, and that was sort of something you'd do if it was perceived 'war' loomed. In a comment today I amplified a different possibility: that China wants Oil prices very high to push 'their' citizens into EV's, for which sales dropped even there.

It's hard to know for sure of course, but perhaps a bit of both reasons, since it is normally not fathomable to visualize a peaceful government stocking fuel, oil, or similar reserves at the highest prices, unless there's compelling reason.

Individual stocks were of nominal interest today, I did talk about Rocket Labs (RKLB), which we've never owned, but picked up a tiny number of shares today after it got crunched in the wake of a launch failure. I'll add it to the follow list but has to do some more work to show a new base before I'd consider more than just a 'nibble'. Terran Orbital also was hit, might be in sympathy but shouldn't be.

Bottom-line: 

S&P is pretty high and hard to envision it doing much more, but there is so much skepticism that it is logical to expect some relief rallying with a sigh of reduced stress presuming the Fed doesn't try scaring everyone.

Oil remains strong just a bit shy of 90 in WTI… plus a couple bucks higher in Brent. How the Fed reacts to that will be interesting, as for sure it contributes to inflation, but has little or nothing to do with U.S. monetary policy in regards to dampening the pace of inflation. However whether or not the FOMC clearly will recognize that this week, matters, even if S&P tries going up, then tries to dip, which would be logical, but again this is a bifurcated market situation. 

More By This Author:

Market Briefing For Tuesday, Sep. 19
Market Briefing For Monday, Sep. 18
Market Briefing For Thursday, Sep. 14 And Later