The S&P500 ($SPX) fell 2.9% last week, and starts this week 6.4% below the 50-day moving average and 6.2% below the 200-day. All three signals continue to show bearish trends unfolding.
2022-03-13-SPX Trendline Analysis - Daily
The ADX is bearish and shows that trend is actually strengthening(!). Analyzing price and volume action shows institutional selling continued to accelerate as the market dropped early last week. One bit of bullish news was that trading volume decelerated as the market fell on Friday.
2022-03-13- SPX Elliott Wave Analysis - Daily - Primary 2
Elliott Wave shows the SPX moving through Minor 5 of Intermediate (3). Price levels to watch are 4417 on the upside and 4115 on the downside.
February CPI data was published last week and prices rose 7.9% year over year (Core CPI came in at 6.4%). The previous reading was 7.5%, showing the inflation continues to accelerate. And this reading DOES NOT take into account the recent moves in energy.
The new fed funds rate will be announced on Wednesday (2pm), followed by Fed Chair Jerome Powell news conference at 2:30 pm. As mentioned last week, a 0.25% rate hike is largely priced in, so I expect any volatility to be short lived.
I thought we'd start to see year-over-year inflation readings start to decline by now, but I also thought that Russian wouldn't invade Ukraine. Both examples highlight the need to remain open to possibilities and adjust based on what "is" happening and how that will impact the future, versus what you think "should" be happening.
With that in mind, here's something to watch as we move forward this year. Ukraine / Russia are major exporters of wheat, corn, barely, and sunflower oil. Spring planting season is just around the corner, and it's not clear how large of an impact the war will have on Ukrainian farming. Russia, on the other hand, faces sanctions that decrease global supply, especially if those sanctions remain in place come harvest time.
Best To Your Week!
Charts provided courtesy of stockcharts.com.
Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments. The goal is to give you to give you an example of how to analyze and continuously improve your own systems.
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