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8/29/22 The Bears Are Back

News:

On Friday, markets opened on a positive note and traded near flat. Then Fed Chair Powell opened his mouth.

Image from CNN.com

He gave a short 10-minute speech … And the markets sold off for the rest of the day.

The Dow lost 1,000 points or 3.0%—it was the smallest loser.

The Nasdaq dropped the most, losing 3.9%, as all four indexes finished at their lows.

Powell’s Words

A few notable excerpts from the speech…

  • On inflation: the central bank will “use our tools forcefully.”
  • On interest rates: higher interest rates likely will persist “for some time.”
  • On the economy: expect “some pain to households and businesses.” 

Market Round-Up

We’re looking for a bright spot but having trouble finding one.

  • All 11 sectors ended Friday deep in the red. Riskier sectors were at the bottom.
  • Futures are down again this morning.
  • Bitcoin is trading below $20,000 for the first time since July 14th.

Technicals:

The VIX tells the story.

25 is the key level we called out months ago.

This morning it’s in the rearview mirror. As the bulls have left the market.

VIX chart with 25 marked
VIX Daily Candles – Chart via thinkorswim

RSI levels are neutral.

The put-to-call ratio is oversold.

The bears are back with a vengeance. And you never can tell when they’ll let up.

Markets tend to fall like an elevator and rise like an escalator. 

Timing:

While we’re happy to see August go, September, traditionally, isn’t much better.

Summer months are generally slow for the markets. Here’s what we’re watching in the week ahead…

  • Retail earnings reports will continue … Full list here
  • September starts on Thursday.
  • We’ll get the latest unemployment rate on Friday morning.
  • Afterward, it’s a long weekend, thanks to Labor Day.

Watchlist:

^Open Position

COGT support at $16
VERV has support at $38
RYTM support at $23
FLNC support at $19
DXLG resistance at $5.50
DNOW support at $12
^GEO resistance at $8.50
TCRT support ta $2
^GERN resistance at $2.50
TAL resistance at $6
GSAT support at $1.80

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