We’re Watching Key Technical Levels After the Fed Decision
The S&P 500’s 100-day moving average and the MACD indicator are in our tactical scope.
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As you’ve probably noticed, the stock market started to sag as Fed Chair Kevin Warsh delivered his comments, which, in our view, were once again somewhat vague. He did walk through the updated Set of Economic Projections and firmly reiterated the committee’s commitment to returning inflation back to the Fed’s 2% target.
The issue at play as we see it is that higher interest rates (and the prospect for another rate hike) mixed with sticky inflation pressures is a headwind combination that will foster further resetting of S&P 500 EPS expectations for the coming quarters. As you know, that is something we’ve been preparing for by building up the Pro Portfolio’s cash levels.
Now with the market reacting to that likelihood, we are watching the S&P 500’s technical setup and whether is bounces off its 100-day moving average at 7510.95 or moves below it. We also will want to watch the subsequent testing of that level to determine if it is one of support or if it becomes one of resistance.
We’ll also be watching the S&P’s MACD indicator closely and as well as those levels for the Nasdaq Composite and our holdings. Our suspicion is we will have the opportunity to pick up shares at better prices, but there could be some uncertainty and incremental pain to get there.
