2022-01-11

The Tootsie Pop Market

SPY: A one, a two, a three:
Same deal with NQ, but with lower lows:
The RTY looks like an inverse H&S pattern, but is it valid? A H&S is a reversal pattern, not a continuation pattern. The target for the pattern is the all-time high, but my suspicion looking at the above charts is that these seemingly bullish setups will fail.
The one to watch is the Nasdaq because it is the most bearish of the three, followed by the Russell 2000 because it failed at a resistance line. The S&P 500 Index will be the last to go if breakdowns follow.

Crude oil also did a one, two, three on support and then moved higher. Either direction would be bad news for equities. Down would repeat the pattern of the past 13 years. Up would break that pattern and open the door to a very bearish scenario for stocks.

Federal Reserve Chairman Powell will be at the Senate today for his confirmation hearing. Who knows what will be said, but Senators will pressure him on inflation. Bullard and Mester speak today as well and they've both been hawkish. Waller floated the idea of balance sheet reduction as soon as July. Today we may find out if that was a one-off comment or the new direction of Fed rhetoric.

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