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Commentary: Paul Ebeling on Wall Street


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“Earnings season is in full swing“– Paul Ebeling

The US stock market finished last wk on the upswing.

There is a bit of hesitation in the futures trade today, partly because of how well the market did last wk. That is, there is an expectation that it could be confronted with some profit-taking activity as investors wrestle with their own reservations about a number of items.

The Big Qs:

  • Will the Fed and other central banks have to implement rate hikes more quickly than expected to curb inflation?
  • Will concerns about profit margin compression become more pronounced as the Q3 reporting season continues?
  • Will rising energy prices undercut global economic growth and earnings prospects?
  • Will the supply chain issues persist through 2022?

The Big A: Answers will come in due course.

The S&P 500 is back above its 50-Day MA at 4437, as is the NAS Comp at 14,870, participants are waiting to see if there are some legs under this positive technical action.

Some weaker than expected data out of China has slowed the stock market’s rebound momentum.

Another factor slowing the stock market’s rebound momentum is the Treasury market. Yields are rising across the curve amid some renewed inflation concerns.

The 10-yr T-Note yield, which flirted with 1.50% following last wk’s CPI and PPI reports, is up 4 btps today to 1.62%. The 2-yr T-Note yield, which is more sensitive to changes in the fed funds rate, is up another 4 bpts to 0.44%.

Notably, the CME FedWatch Tool shows a greater than 50% probability of a rate hike in the early portion of Q-3 Y 2022, vVs just a 15% probability a month ago.

The drive forward in rate-hike expectations may serve as a headwind for a stock market that has operated without any rate-hike expectations for a long time.

Have a prosperous week, Keep the Faith!

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Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.