November 30, 2022
Good morning,
Unrest in China this past weekend was a sufficient catalyst to trigger some profit taking on Monday with the S&P 500 Index (SPX) down -1.5% on the day. There was little follow-through selling yesterday, which is a good sign that perhaps the forces of demand supporting our rally haven’t left the building – it was an unusually light volume day with the SPX off -.15%.
Futures are unchanged this morning as traders await Fed Chair Powell’s presentation to the U.S. Senate today. Except for the true dreamers, few expect JP to lighten his hawkish positioning. That leaves the jobs report on Friday, 12/2, and the CPI release on 12/13 to likely set the tone for investor sentiment prior to the last Fed meeting for the year on 12/14. We could see some side-ways action to the markets into the Fed meeting with profit taking sellers matched up against the same buyers behind the current rally. Technically, a 2wk market meander would neatly work off the short-term overbought conditions (mentioned Monday) that may be weighing on the market at this time.
Be well,
Mike