By: Jeff Cooper
Hit and Run Morning Stock Report: November 3rd, 2022
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Pig In A Poke
“We’re not thinking about raising rates. We’re not even thinking about raising rates.” June 14, 2020.” Powell
“It is very premature to be thinking about pausing our rate hikes, we have a ways to go.” Powell, November 2, 2022
From the Fed “Pivot” promised to you by Blackrock and JPM that was going to trigger a 10% rally to a Bull Trap.
Fed Day was an FOMC Cha Cha Cha for the books.
As we offered on Tuesday, Fed Pivot?….maybe acid.
It’s pure poker. If Powell intends to pivot in December or January…why say so now?
Play your hand when it’s time to call.
“You can shear a sheep a hundred times, but you can only skin it once.” Amarillo Slim
With support breaking (see the bottom of yesterday’s report) the SPX looks like it’s headed to 3730 and the 20-day moving average.
Markets during the Press Conference with Chair Powell seemed to respond to every word and to attach meaning and implication for markets ahead to every syllable he uttered.
But the most significant market mover of all was around the midpoint of the press conference when he said something akin to “the ultimate peak in rates will be HIGHER than we’d previously expected.”
Once that sentence left his lips, we saw the DJIA drop 5000 points in a few minutes from up several hundred to down hundreds of points
The bottom line seems to be what the VIX complex has been predicting this week. Markets appear to have started a new downtrend.
It’s remarkable how the market pivoted in tandem with the SPX turning its 3 Week Chart up this week.
Still, we need to get validation of the new downtrend on a break of the June lows.
Trend measures via breadth, VIX, NYMO, and NAMO will inform the direction prior to breakage of the 3636 June low.
If that occurs November will see the capitulation stage of this first Intermediate- Term decline that has been in play since January 4th, 2022.
Recently, traders have talked up the “Pivot” to such a ridiculous extreme that reading and hearing all of that rhetoric, one might have begun to believe that we are not in a Bear Market but that a new bull market had begun.
When the Street gets disabused of this narrative, the November capitulation will be in full bloom.
Remember, mid-November is 90 degrees from the mid-August secondary high and mid-November is a Time/Price square-out with 482 (4820) the all-time high.
This weekend we will be working on a report that puts this bear market in perspective.