The Federal Reserve Rate Hike Slowdown Speculation Makes All the Difference

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It’s the best 6 months of the year for the stock market (November – April). Yes, seasonality was a tailwind but the real reason many stocks are doing downtrend channel or Triangle/Wedge breakouts is because of speculation that the Federal Reserve is going to slowdown its pace of rate hikes from 75 basis points a meeting to 50 basis points.

On Wednesday, November 23, 2022, we got the Fed’s Meeting Minutes which showed that most voting members agreed to slow down the pace of interest rate hikes.

The number of Americans filing new claims for jobless benefits increased to a three-month high last week amid rising layoffs. Sales of houses have plunged as well. This has led some institutional investors to believe that the Fed is over-tightening. For these reasons, the market is having a relief rally on news that the Federal Reserve may soon slowdown rate hikes.

SPY stock chart shows an uptrend channel with a downtrend channel breakout. Therefore, many individual stocks are also showing the same downtrend channel breakout patterns. SPY is in a technical weak downtrend rating but with the money flow going positive last week, we could update that technical rating soon.

SPY stock chart on November 24 2022 in an uptrend channel with a positive MACD and positive money flow
SPY stock chart on November 24 2022 in an uptrend channel with a positive MACD and positive money flow

Bad news is good news because markets think the Fed will slow down, says Short Hills’ Steve Weiss

Bad news is good news because markets think the Fed will slow down, says Short Hills' Steve Weiss
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