fbpx

9/8/22 Buyers Show Up In Droves as Energy Costs Plummet

News:

Yesterday it was all buyer all day. 76% of stocks posted gains.

All four indexes ended significantly higher…

  • Dow Jones +1.4%
  • Nasdaq +2.1%
  • S&P 500 +1.8%
  • Russell 2000 +2.2%

The reason was exactly what we told you yesterday. The market was oversold…

Think of a rubber band … you can only stretch it so far. This morning some of the pressure has been relieved.

Photo of a person stretching out a rubber band
Photo by Kenny Eliason on Unsplash

Sector Round-Up

10 of 11 sectors ended Wednesday green.

Notably, buyers focused on safer stocks…

  • Utilities (XLU) led with a gain of 3.3%
  • Consumer Discretionary (XLY) followed, adding 3.1%
  • Materials (XLB) +2.8%

The lone loser…

  • Energy (XLE) -1.2%

Crude is trading near $81 per barrel this morning.

  • It’s lowest level since mid-January
  • About 40% below this year’s high

75 More Points

This morning, the Walls Street Journal’s front page story is:

  • Fed on Path for Another 0.75-Point Interest-Rate Lift.”

The initial report dropped yesterday, but the market took it all in stride.

The Fed has pledged to fight inflation until the job is done.

With energy pricing falling, inflation is likely to follow, and the rate hikes could slow after that. Time will tell.

Crypto Creeping Up

Bitcoin^ is back above 19,000 this morning.

Support held in June and July at $18,500. We’re watching to see if it can hold that level again.

Bitcoin chart with support marked at $18,500
Chart from BarChart

Technicals:

It’s hard to find a chart better looking than this…

SPY Chart marked as noted below.
SPY Daily Candles w/RSI – Chart via thinkorswim

Here are the big takeaways…

  • In mid-August, the market became overbought (circles)
  • Over the past few days, the market became oversold (arrows)
  • Yesterday the S&P 500, representing about 80% of the stock market’s value, held support at the rising support level (marked with a line).
  • Also, yesterday’s buying revealed a “bullish engulfing” pattern, which indicates a trend reversal.

This morning…

The market is free to move in the direction of least resistance.

Timing:

There are two big news-making events we’re watching this month…

  • Tuesday, September 13, the latest CPI inflation data will be released
  • Wednesday, September 21, the FOMC meeting concludes, and the latest rate hike is announced

All the speculation around these events is just noise. Significant market moves will likely come afterward.

Watchlist:

*Low Float
^Open Position

*APRN resistance at $7
IMRA on watch
CFVI on watch
COGT support at $16
SPWR support at $26
FLNC support at $18, resistance at $20
DXLG resistance at $6
HOLI support at $18
^GEO support at $8, resistance at $9
TCRT on watch
RUN resistance at $26
^GERN support at $2.50
TAL support at $5

Leave a Comment

Your email address will not be published.