Breakdown
Market Update September 21, 2023
The Markets
Jerome Powell did it again. Yesterday the Federal Reserve announced (as expected) that they would not hike interest rates this time around. Stocks seemed to handle the news just fine. But, as mentioned earlier in the week, the focus was on what was said. Apparently, the interpreters and decoders did not like the message.
Greta Wall, Senior Correspondent for T3 Live, shared this. It notes the minute changes in phrasing from the Federal Reserve Chairman showing what was said last time (strikethrough) and what was new this time.
We can chuckle a bit at the minutiae. But we can not argue with the effect. The resulting message was along the lines of,
“We’ve raised rates and now we have to wait to see if it works.”
They call it, being data dependant.
While not exactly doom and gloom, it wasn’t enough to entice buyers. In the absence of buying, the sellers took over and prices moved lower and away from the recent consolidation ranges.
Let’s look at the charts.
The Charts
SPY with a gap-and-go to the downside, blowing right past the 100-day MA, the April low AVWAP, and into the $431 pivot low from late June. Below here there is a gap area around $422-$424, followed by the 200-day MA near $418. That level also coincides with the major breakout level, $417.
Two big down days heading into Friday and the weekend probably don’t set up a bounce situation very well. But a flush of today’s lows, and then possibly a hammer candle could increase the chances of a bounce early next week.
One possible outcome. Anything can happen.
QQQ also with a gap down open which led to continued selling before the day closed beneath the 100-day MA and April low AVWAP. The difference here is the potential support/resistance zone is still below the price.
$354-$355 could be an important level tomorrow. If that doesn’t hold, it’s a long way down to the 200-day MA at $328.
IWM small caps have more problems as they accelerate lower beneath the 200-day MA, into the gap area, and confirm the head and shoulders pattern. Maybe the gap gets filled and prices reverse back up. Otherwise, all the moving averages are well above and we have to look for pivots and other sources of potential support.
The next major pivot point is just under $169. And the H&S pattern gives a measured move price objective near $165.
DIA is below the 100-day MA and very near the $340.35 pivot. Maybe that can provide support. Regardless, the breakout is now a failure. Further selling and a move down the 200-day MA would not be a surprise.
TLT continues to get sold as yields on 10 and 30-year bonds reach new highs. No “flight-to-safety” trade here. Not yet anyway.
DXY The Dollar is once again showing potential for reversal. Until that is confirmed, the trend is higher, adding pressure to stocks.
The Closing Bell
So the range has finally broken. Now we look for opportunity. The support levels we’ve been watching for weeks are being tested. We’ll want to know;
Do they hold?
If broken, can prices quickly recapture?
If not, what are the next levels below?
It is probably asking a lot to look for a bounce before the weekend. Especially during this seasonally weak period of late September. And don’t forget the “Sell Rosh Hoshana, buy Yom Kippur” phenomenon.
Maybe next week buyers can step back in.
In the meantime, don’t forget to join me Saturday morning for a look at the Weekly Charts. They will tell us a lot this week.
See you there.
https://twitter.com/Andy__Moss
The Disclosures
***This is NOT financial advice. NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.
Andrew Moss is an associated member of T3 Trading Group, LLC (“T3TG”) a SEC registered broker/dealer and member of FINRA/SIPC. All trades placed by Mr. Moss are done through T3TG.
Statements in this article represent the opinions of that person only and do not necessarily reflect the opinions of T3TG or any other person associated with T3TG.
It is possible that Mr. Moss may hold an investment position (or may be contemplating holding an investment position) that is inconsistent with the information provided or the opinion being expressed. This may reflect the financial or other circumstances of the individual or it may reflect some other consideration. Readers of this article should take this into account when evaluating the information provided or the opinions being expressed.
All investments are subject to the risk of loss, which you should consider in making any investment decisions. Readers of this article should consult with their financial advisors, attorneys, accountants, or other qualified investors prior to making any investment decision.
POSITION DISCLOSURE
September 21, 2023, 4:00 PM
Long:
Short:
Options symbols are denoted as follows:
Ticker, Date, Call/Put, Strike Price
Example: VXX1218C30 = VXX 12/18 Call with a $30 strike
