No buyers showed up on Tuesday.
In the morning, the CPI inflation reading came in hotter than expected, and the selling began.
Here’s what you need to know:
- Inflation rose 0.1% month over month.
- And 8.5% year over year.
- It’s the second highest reading in 4 decades
- June’s was the highest at 9.1%.
- The market is now factoring in the possibility of a 1.0% rate hike from the Fed next week.
- Today a 0.75% increase is considered the minimum
Then the market got kicked while it was down…
In the afternoon, Reuters broke a story: The US is considering a “sanctions package against China.”
- Tensions over Taiwan continue to escalate.
- According to the report, talks are in “early stages.”
- Reuters cites only “sources familiar with the discussions.”
Tuesday belonged squarely to the bears.
All four indexes dropped like rocks … It was the Nasdaq’s worst day in more than two years.
- Dow Jones -3.9%
- Nasdaq -5.2%
- S&P 500 -4.3%
- Russell 2000 -3.9%
All 11 sectors finished much lower.
The smallest loser was…
- Energy (XLE) -2.5%
At the bottom…
- Communications (XLC) -5.5%, which, as we pointed out yesterday, was already the weakest sector in the market.
The S&P 500 closed at its rising support level.
The line on this chart was drawn last week and is being tested again.
When the market reaches a critical support level, it’s often a buying opportunity. But keep in mind that support and resistance levels get weaker each time they are tested.
Our top indicators aren’t united at the moment.
- The VIX is above the key level of 25 but below resistance at 28
- RSI levels remain neutral for all four major indexes
- The Put-to-Call Ratio is grossly oversold for a second day
This week is the year’s third triple witching. Watch for added volatility as Friday approaches, especially with the put-to-call ratio out of whack.
All eyes are now looking to next week’s FOMC meeting.
- It begins Tuesday, September 20
- Concludes on the 21st
- The new rate drops at 2 pm
- Fed Chair Powell will take the stage at 2:30.
IMRA support at $2
ETNB is on watch
MNTK support at $19
DCPH support at $18
RYTM resistance at $27
CRBU support at $12
AGIO support at $32
RVNC on watch
PNT resistance at $10.50
SGML support at $25
SEEL support at $1.35
^GEO support at $8\
ARDX support at $1.40
PGEN support at $2.60
TCRT on watch
^GERN support at $2.80
TAL support at $5, resistance at $6