News:
Markets fell sharply yesterday.
The Nasdaq dropped 2.7%, and while every sector finished in the red, the Communications sector performed the worst shedding over 3%.
The catalyst … Inflation.
To combat rising inflation the European Central Bank (ECB) has announced its intent to raise interest rates for the first time in 11 years.
Photo by Guillaume Périgois on Unsplash
The 25-basis-point hike comes as a surprise to the markets.
Inflation remains the market’s biggest concern. Notably, the sell-off came just hours ahead of the latest CPI report, which is due out at 8:30 this morning.
The White House issued a warning on Wednesday saying, they “expect the headline inflation number to be elevated.”
The selling caused the three major indexes to break down from their respective ranges.
Technicals:
The S&P 500 finally broke out of its two-week-old range giving the bears the upper hand.
SPY Daily Candles – Chart via thinkorswim
The VIX crept back above 25 … advantage bears.
But volume was rather light on the day, especially given the magnitude of the decline.
The put-to-call ratio is oversold for the second day in a row.
Markets have a lot to be upset about…
- EU rate hike
- High Inflation
- The White House’s warning…
But it appears that many participants are withholding judgment until after the CPI data comes out this morning.
Timing:
Inflation and rate hike news inbound.
All eyes are on the CPI report coming out today.
And there’s more big news around the corner too…
The FOMC meeting is set for Tuesday and Wednesday of next week. A 50-basis-point hike is widely expected at the conclusion of the meeting.
And don’t forget it’s still summer.
Expect choppy markets to continue until after the mid-term elections in November.
Watchlist:
*Low Float
^Open Position
*LPI is on watch
*AMR has resistance at $180, support at $160
HNRG has support at $5.50, resistance at $6
CBIO has resistance at $1.50
PBTS has support at $1
CNCE has support at $5
^HDSN has support at $9
GLOP has support at $7
SD has support at $25
CTT has resistance at $12, support at $11.40
VTNR has support at $16, resistance at $18
ESTE has support at $20
CTIC has support at $6
DBVT is on watch
BORR has support at $6
TTI is on watch
HRB has support at $35
AR has support at $45.50