US Market Outlook – 29th Aug, 2022


Federal Reserve Chairman Jerome Powell delivered a stern commitment Friday to halting inflation, warning that he expects the central bank to continue raising interest rates in a way that will cause “some pain” to the U.S. economy.

In his much-anticipated annual policy speech at Jackson Hole, Wyoming, Powell affirmed that the Fed will “use our tools forcefully” to attack inflation that is still running near its highest level in more than 40 years.

Stocks plummeted Friday after Federal Reserve Chair Jerome Powell said in his Jackson Hole speech the central bank won’t back off in its fight against rapid inflation. The Dow Jones Industrial Average dropped 1,008.38 points, or 3.03%, to 32,283.40, with losses accelerating into the close. The S&P 500 fell 3.37% to 4,057.66, and the Nasdaq Composite slid 3.94% to 12,141.71.

So Now What?

All major indices looking super weak and more pain coming up in next few weeks. $SPY, $IWM, $QQQ all indices are developing bearish H&S.

Take a look at $SPX cash index below. It’s forming Bearish H&S on 1 hr chart. Potential to go down up to 3925-3900 in couple of weeks. That equivalent to $SPY at 390 approximately.

S&P 500 Index

Based on my blog on Aug. 17th. I was expecting $SPX to retrace back towards $4050 area from 200 SMA (4300) by Sep. It came down faster to my target.

Let’s take a look at the weekly chart of $SPX. Weekly chart gets precedence over daily and monthly chart gets precedence over weekly. As per my indicators CCI, Stochastic – turning bearish. Also, RSI dropped below 50 on a weekly chart. It’s not a good sign. As per Fibonacci levels, 61.8% dropped from recent peak brings us back towards 3900 area. It’s still not too late to have some downside exposure if you haven’t get any last Friday or before. You always makes money faster on downside then upside if you know how to play!

S&P 500 Index chart

$IWM – Russel 2000 index also showed bearish H&S and downside potential target up to $179. This pattern is active only below $189.5

$QQQ – Nasdaq ETF – Similar bearish H&S pattern. Downside potential up to 293. In active above 314.

Please make sure to watch out In-active levels. If any reasons market recovers above these inactive levels then patterns go void. That time, either you have to exit out your bearish positions or play neutral strategies for a while.

Good luck and have a nice weekend!

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Dow Jones Industrial Average 
$36,204.44  $41.06  0.11%  
NASDAQ Composite 
$14,185.49  $119.54  0.84%  
S&P 500 
$4,569.78  $24.85  0.54%  
Russell 2000 
$1,882.02  $19.37  1.04%  
CBOE Volatility Index 
$13.08  $0.45  3.56%  
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