I’m going to keep it short and sweet in this week’s Wall Street look ahead… There’s no sugarcoating it: This market sucks — but I’m looking for a bounce.
In short, we’re overpriced on gloom in the short term. We even went as far as to price in a 100-basis-point interest rate hike for this week’s Federal Open Market Committee meeting. But I don’t believe that will happen… I expect the Fed to raise by 0.75%, and the market to rally.
Wall Street Look Ahead, Sept. 19, 2022
FOMC RATE DECISION, Sept. 21: Two-year yields are already up near 4%, which is deeply inverted. The bond market is pricing in an overly aggressive Fed, even as a lot of data suggests the economy is already slowing considerably. And no chart in the world reflects that hawkish Fed pessimism more than this one…
This is the most important chart in the world right now — it’s the first thing I check in the morning, and it’s a major catalyst for stock selling. We’re flirting with a huge psychological 4% benchmark interest rate. But once we hit that or not, it should calm people down as the world will still be standing.
A pullback to 3.5% on the two-year would see the Nasdaq rally 5% minimum.
Which leads to my next key chart… the Nasdaq.
I have 11,500 as support — July’s bounce low — on the NDX, which represents about 3% lower from Friday’s close, as this week’s downside.
I have 12,616 as the upside, around 6%, which is the 50-day moving avg. I like that risk-reward profile to the weekly upside A LOT!
But a word of caution… We’re in extreme conditions, so keep cash handy at all times! And trade fluid, quick and smaller size.
We’ll discuss where I was right or wrong in this Wall Street look ahead on Friday!
Joy of the Trade, WealthPress
I knew it!
My research earlier this year pointed strongly to a looming housing recession. Now most experts agree that it has arrived.
The Federal Reserve raising interest rates resulted in 30-year fixed mortgage rates climbing above 6%, just as I anticipated. Look at the trend since last year… the blue line represents 30-year mortgage rates.
We haven’t seen rates like this since 2008…
As potential homebuyers cringe away from the burden of these rates, existing and new home sales continue to retreat.
Instead, those would-be homeowners are turning to single-family rentals like never before.