Bears FIRMLY Back in Charge of Stocks Once Again!
It is not unusual for the new year to start bullish. Just a fresh dose of optimism comes with flipping the calendar.
Those good vibes are over!
Now more investors are coming back around to the bearish premise that never really went away. Add in a dose of concerns about the health of the financial industry and we finally broke below the 200 day moving average with odds of much more downside on the way.
I am here to make sense of it all in this week’s market commentary below…
As they say a picture is worth a thousand words. So, let’s start with the picture of the S&P 500 (SPY) this past year including the long term trend line better known as the 200 day moving average (in red).
You can see how vital the 200 day moving average has been in framing the action this past year. First being the bearish break below in April 2022 with many subsequent suckers’ rallies that failed as they approached this key level.
However, the bulls really tried to make a convincing run of things by finally breaking above in January and staying above for nearly two months. That party ended yesterday with the first close below the 200 day (3,941). And today was a convincing follow through session to the downside.
Now the bears are firmly in charge once again. Let’s discuss why…
On Tuesday of this week Fed Chairman Powell reminded everybody why they should reconsider their bullish ways. In essence he stated that given the facts in hand that rates will likely need to go higher than previously stated…and stay in place for longer.
This led to a -1.5% sell off on Tuesday. Just for clarity, here is the key quote from Powell so you appreciate that there is little room for misinterpretation…
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