US Market Outlook – action packed FOMC week Sep 19, 2022
It will be a high volatile action packed trading week due to FOMC meeting. On Friday, stocks slid as investors reacted to a hotter-than-expected inflation report and a dismal warning from FedEx about a “significantly worsened” global economy. The Dow industrials dropped 139 points, while the S&P 500 lost 0.7% and the Nasdaq Composite shed 0.9%.
Investors are focused on the Fed’s two-day meeting, which will begin Tuesday. The central bank is expected to raise interest rates by another three-quarters of a point, though investors are also watching for guidance about corporate earnings before the next reporting season begins in October. Mr. Powell is speaking on Wednesday. Beyond the Fed meeting, there are just a few economic data releases this week, including August housing starts on Tuesday and initial jobless claims on Thursday.
Mark Newton, head of technical analysis at Fundstrat, said investors shouldn’t get too tempted by a potential bounce in the coming days as the S&P 500 (SPX)could fall under $3,700 before a more meaningful rally kicks in.
“September’s Triple Witching Friday close at multi-week lows is particularly negative for the prospects of a rally, and further selling still looks likely over the next couple weeks to undercut $3,700 before a relief rally can get underway in October,” he said.
Let’s take a look at $SPY daily chart. It has 2 potential near by gaps that market will try to fill out this week. Upside there is a gap around $390 and on a downside there is a gap around $378 area.
Before FOMC things will move slowly and possible that it try to fill the gap upside around $390 by Tuesday. At this point market is already on a downtrend so any rate hike surprise market can accelerate selling pressure. Possible that it will fill that gap on downside around $378.75.
$SPY what I’m watching for this week is to see if support at the $381.5 is tested or holds, if that level cant hold, SPY can move towards $378.7, $374.
If $SPY recovers $387.5, it can bounce back towards the $390, $392.5 in the short term to retest trend.
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