Limit down tonight?
Daily Plan 9.21.23
Today was a great example of if you have not already, make sure you turn on the chat and my notifications to receive timely updates. See below. These are included at no extra cost to all subscribers. No sooner that I posted this, we started dropping and did not stop until 4445.
This analysis was posted real time, during the conference, not in hindsight!
Anyways, most of you have by probably already heard what was said by Powell so I will not repeat everything but in short, he flip flopped in an instant! He undid pretty. much what he had been saying for many months now which was that the inflation in under control and rates are near terminal levels.
This guy is extremely coquettish but it also underscores what I have been saying - when you are at that level, of being a major Central Bank Chair, yes they may know a couple of things more than you and I, but for most part they are also operating at same level as us- which is it is hard if not impossible to predict macro forces.
It is very hard so they have to be a little bit vague and that is what he should have done but instead he made it a point to begin celebrating end of celebration. Prematurely.
Look, the problem is if the FED is not too strict, then inflation will go up which we have already seen. If they are too tough, then there will be deep recession. Either scenario is not the best outcome for some of the high flying junk which is selling at these insane valuations. The FED alone has printed 8-10 trillion dollars in last 2+ years, and S&P500 has managed to gain a 1000 or so points. This alone is not a good indicator for what is to come (LONG TERM). It is not like the FED prints 10 trillion dollars and we are trading at 6000-7000 dollars on the SPX.
Anyways, we will leave this ranting to the podcasters, let us get back to what we do best which is effective levels and useful price action analysis…
My levels for tomorrow
My levels on tomorrow are mostly based on the fact that Powell did not raise any rates today, despite jabbing in entirety of the FOMC as how hawkish he is.
Then the Dollar spiked but failed in its breakout and the yields did not make a new high.
This may mean that this market does not believe in Powell’s credibility. I agree. I will believe Powell when I see the Dollar go above 106-108.
If this is correct, I think we could see Dollar capped at 105. Longer term I think, I need to see a breakdown in both the SPX and the DXY. I think it will happen but until it happens, I believe we may see a dip in dollar equate to a rip in SPX. This is why I still do think we are in a giant range with support near 4400 and resistance near 4600. I do not see much of a resolution until we resolve this range either to the downside or to the upside. At time of this post, we last traded around 4450.
My key level tomorrow will be 4408-4411.
At the time of this post, we last traded 4444. The levels are Emini, for SPX, we are right now around 4400.
Scenario 1: I think we could see support come in near 4408 if the level is tested for a move back into 4450.
Scenario 2: I think more bearish action comes on a Daily close below 4408. I think if we do close below 4408, this could lead to significant volatility leading to a test of 4150. More on this in the weekly plan, if and when we get there. This I think will need to see DXY above 106, TLT back below 92 etc.
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XHB update
About 8 weeks ago, I warned about the housing sector XHB at 85.
Today it settled a full 10% lower than those levels.
LULU
We saw good rally in LULU off my levels. I think if we now hold 385-390, we could see 410 retested.
Much more to come for subscribers. Very excited for volatility and tremendous ideas that accompany volatility.
Subscribe now and don’t be left cold. Winter is coming!
~ Tic
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