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9/23/22 Higher, Higher, HIGHER!

News:

Yesterday, once again, belonged to the bears.

The bulls put in a solid effort, and the Dow Jones even turned green in the final hour of trading. 

But in the closing minutes, sellers overwhelmed buyers, and every major index closed in the red.

  • Dow Jones -0.4%
  • Nasdaq -1.4%
  • S&P 500 -0.8%
  • Russell 2000 -2.3%

Notably, the “risk on” stocks of the Nasdaq and the Russell 2000 suffered disproportional losses.

Blame the banks…

Higher Interest Rates

Dramatic image of downtown London with the bank in the middle
Bank of England – Image from Investopedia

The reason for the selling was pretty clear. Around the globe, central banks followed The Fed’s move to raise interest rates

  • Bank of England … +0.5% to 2.25%
  • Norges Bank (Norway) … +0.5 to 2.25%
  • Bank of Indonesia … +0.5 to 4.25%
  • Hong Kong Monetary Authority … +.75 to 3.50%
  • Swiss National Bank … +0.75 to 0.50%
    • (ending its negative rate for the first time since 2015)
  • Japan broke the trend leaving its rate unchanged at -0.1%

Sector Round-Up

10 of 11 sectors closed the day red.

The lone winner…

  • Healthcare (XLV) +0.5%
picture of mixed pills
Photo by Myriam Zilles on Unsplash

It’s worth noting that people will spend money on their health regardless of economic conditions.

To quote a friend, “Cancer is always a hot sector.”

The day’s biggest losers…

  • Industrials (XLI) -1.5%
  • Financials (XLF) -1.7%
  • Consumer Discretionary (XLY) -2.3%

Technicals:

How low can we go?

Today we’re pulling out a chart that shows the number of stocks trading below their 200-day moving average.

Chart tracing MMTH over 20 years
MMTH 20-year chart — From BarChart.com 

After yesterday’s selling, the market is closing in on 20% … A level that has been breached only four times in the past 20 years and never maintained.

Our other indicators say a turn is near.

We’re looking to buy into a retest of June’s lows.

We’ve not sold a single share of stock this week.

Timing:

October is only 6 trading days away. 

On the other side of October are the mid-term elections … Once those are behind us, we’ll be looking for blue skies.

We maintain a major Q4 rally is likely in store.

Watchlist:

*Low Float
^Open Position

*SLNG on watch
*TNK support at $29
FENC support at $7.50
SAVA on watch
DCPH support at $18
RVNC support at $25
FREY support at $14.50
^SGML support at $25
CANO support at $7.50
NAT support at $3.35

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