Stocks Respond to Rate Hike With a Monster Rally
We wanted a "buy the news" reaction. Now what?
Technical Edge
NOTE!! Please read the Go-To Watchlist today — at least the numbered ones. (TSLA, AMZN, BRK.B, TU, BMY)
NYSE Breadth: 84.3% Upside Volume (!)
NASDAQ Breadth: 88.8% Upside Volume (!)
We got exactly what we were looking for on Wednesday, which was a buy-the-news reaction from the Fed even though it raised rates.
Why? Simple: The market knew what the Fed was doing.
They have been talking about it all year and Fed Chair Powell said the rate-hike was on the way. Along with other issues (as laid out yesterday), the market has been moving lower in anticipation of today’s event. Now that it’s here and out of the way (along with clarity on the Fed’s intentions this year), we can begin to focus on the future.
Some potential resolution in Eastern Europe helps, while falling oil prices should help inflation. There is some bad in there too, which is that the Fed expects six more hikes this year, but let’s see if we can build on today’s rally in the interim.
Game Plan
An 80%+ upside day would have been great on Tuesday, giving bulls a back-to-back 80%+ reading. Now it will be up to tomorrow to deliver those results and that’s a tall ask. High growth traded better and tech finally found a bid.
Investors are trying to figure out if this is just a dead-cat bounce — and if so, how far will it rally — or if we’re seeing a change in tune (i.e. the bulls making a stand and taking back control).
S&P 500 — ES
Yesterday’s top upside level for us was: “4360 to 4378.” With a high of 4367.50, that comes into play right in that area.
From here now, I am taking a “bigger picture” look and these are the levels…
Nasdaq, XLE, MKC, NVDA & the Go-To Watchlist
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Economic Outlook
