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Resistance Prevailed
S&P 500 Index, 3934.38 declined 137.32 points or -3.37% last week with most of the decline occurring on Monday and Tuesday.
November Finishes In The Green, China Up 30%
Wednesday concluded the final day of November and the market will now be entering the final days of what has been for most a very long and exhausting year.
Treasury Bonds Higher Dollar Lower
The U.S. Dollar Index supports the view that both bonds and equities bottomed after the October CPI report.
CPI Short Covering
Unless derailed by an unforeseen macro event the S&P 500 Index will soon test two important levels.
Equities Needed The Good News
Real Estate stocks have been under pressure this year and despite yesterdaya's stellar performance, they are still 25% lower YTD.
Powell Disappoints
After Federal Reserve Chairman Powell's comments on Wednesday, it's clear the markets are trading the Fed not the economy, and have been for most of the year.
The Fed’s Pushback
The FOMC’s message remained hawkish as Powell was stating that the terminal rates would most likely be higher than previously anticipated.
Fundamentals Start To Catch-Up
The overall message from some of the largest companies in the US has been fairly concerning.
Sectors Dislocations Between Europe And The U.S.
US Banks have dropped around 1% in the past 10 days while European Banks have managed to gain around 2.5%.
CPI Key Reversal
Thursday's Key Reversal by the S&P 500 Index in an unusually large 150-point trading range after the release of the September Consumer Price Index data set off speculation as to the cause.
CPI Figures Take Center Stage
Today is the big day with the market’s attention turning towards the US CPI. Figures are expected at +6.5% YoY compared with a prior of +6.3%.
Minor Island Top
The S&P 500 Index opened gap lower on Friday creating an Island Top with a measuring objective back down at the low made on Friday, September 30, at 3584.13 retracing the oversold bounce move that preceded it.
Not Much At Surface Level, More To See Underneath
Looking at the DJIA components, we note the underperformance of banks with JPM and GS losing respectively 1.2% and 1.9%.
New Low No Big Deal
The new low created a potential new technical pattern, an Elliott 5 wave sequence from the January 4818.62 high.
Let’s Look At AAPL
AAPL has lost around 18% this year but continues to show some stellar performance over longer periods of time with 5 years return seen at 289%.
Taking Stock Of The FOMC’s Impact
The intraday volatility was very large with the SPX dropping 60 points in a straight line before rallying back above 3900 early in the afternoon. It eventually settled below 3800.
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