4/7/22 The Fed Remains Hawkish, Shanghai Lockdown Extends

News:

Market digested the March Fed minutes in a volatile way.

On the chart below I marked the moment the minutes were released and the ensuing trend that is generally bullish.

SPY 5-minute Candles – Chart via thinkorswim

Markets did finish the day in the red, but higher than before the minutes were released.

What’s in the minutes: In March interest rates were upped 0.25%, it would’ve gone up 0.50% had Russia not invaded Ukraine.

In the coming months, as soon as May (the next FOMC meeting) the Fed wants to begin reducing its balance sheet in a “predictable manner.” The Fed expects a three-month phase-in which will peak at $95 billion per month.

In Shanghai, Covid lockdowns are causing a food shortage. The Omicron variant appears to have smashed through China’s “zero Covid” policy.

Shanghai is China’s largest city and an “economic powerhouse.” The impact of the lockdowns could ripple across the global markets.

Technicals:

The Dow closed below support for a second day. I’ve marked the rising support level I’m watching on the chart below…

SPY Daily Candles – Chart via thinkorswim

The most notable indicator I saw yesterday was the VIX. It ended the day near its lows. This, without question, favors the bulls.

As I challenge my bullish stance I can not, at this moment, change it.

I’m bullish…

Timing:

As I pointed out yesterday Fed minutes can take some time to get priced in.

We have about 3 full weeks of trading to go in the month of April. A strong finish could take us into a strong summer.

I’ve trimmed my watchlist to the strongest stocks…

Watchlist:

*Low Float
^Open Position

*NVCT has support at $10
*THCA has support at $12
^*SGLY is on watch
GGR is on watch
^NRGV has support at $18
^ASRT has support at $3
SGML has support at $15
BORR has support at $4
^LXU has support at $22
^GLNG has resistance at $25
SAVE has resistance at $28
BRCC has support at $22
TWTR is on watch

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