Another Hawkish Win

S&P 500 duly dived on hawkish Powell – the turning point predicted in Monday‘s extensive analysis. What‘s in store for today?

More of Powell testimony and job openings to reveal no immediate recession, and together with Friday‘s non-farm payrolls spurring (reconfirming) the newly elevated terminal Fed funds rate.

This translated into a fine risk-off turn yesterday with financials confirming and tech joining in the decline. There wasn‘t even a dead cat bounce in the aftermarket, and the premarket struggles go on.

Summing up, dead cat bounce is unlikely to prove as anything more than a failed attempt to reassume initiative even if by some miracle Powell wouldn‘t sound as harsh today as the terminal Fed funds rate reappraisal is generating welcome volatility.

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Let‘s move right into the charts (all courtesy of www.stockcharts.com).

S&P 500 and Nasdaq Outlook

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And we got that one more day of selling. All the chips are in place for a downside surprise – timing is the only question. Not that the catalysts amply described in today’s analytical intro, would be missing. Key levels for today are 4,015 defence with a highly desirable break of 3,980 followed by 3,958 (bridge too far for today definitely and tomorrow probably).

Credit Markets

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Bonds are unlikely to offer more than a temporary respite in the regained risk-off posture. TLT would hold up relatively best, for these reasons given. Flight to safety, recession and tightening.

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