Home 2022 Commentary, Paul Ebeling on Wall Street

#PaulEbeling #WallStreet#FOMC #SP500 #inflation #cryptocurrencies


US stock benchmark indexes reversed make huge comeback after steep losses Monday“– Paul Ebeling  

DJIA +99.13 at 34364.50, NAS Comp +86.21 at 13855.13, S&P 500 +12.27 at 4410.2   The S&P 500 increased 0.3%

Monday in strong buy-the-dip trade after being down as much as 4.0% intraday, the NAS Comp gained 0.6% after being down 4.9% intraday, the DJIA gained 0.3% after being down 3.3% intraday, and he Russell 2000 outperformed with a 2.3% gain after being down as much as 2.8%.    

The US stock market’s fall to start the yr had short sellers up about $114-B in realized and unrealized gains so far in Y 2022 as of Friday, or an 11.6% increase  

Potential for negative surprises like wages is inflated.

The NAS is correcting, which is loosely defined as a 10% pullback from a prior closing high.

The Russell 2000 is flirting with a Bear market, which is loosely defined as a 22% pullback from a prior closing high.

The S&P 500 and DJIA both fell below their 200-Day MAs.

  • DJIA -5.4% YTD
  • S&P 500 -7.5% YTD
  • Russell 2000 -9.4% YTD
  • NAS Comp -11.4% YTD

A rush to buy every dip in Y 2021 YTD has supplanted by an inclination to sell into strength.

The 10-yr T-Note yield went from 1.51% to 1.90% in 11 trading sessions. The fed funds futures market, which only a month ago thought 3 rate hikes in Y 2022 was a close call, is now projecting 4 rate hikes in Y 2022.

There is chatter that the Fed will raise the target range for the fed funds rate by 50 bpts at the March meeting to try to regain some inflation-fighting credibility.

As a reminder, the target range for the fed funds rate is Zero bound while the consumer inflation rate of 7.0% sits at a 40-yr high.

That inflation has been driven by higher prices for goods and services, which have been exacerbated by supply chain problems, transportation bottlenecks, and under-investment.

Key Commodities

WTI Crude Oil futures settled lower by 2.2%, or $1.86 to $83.30/bbl, Gold futures settled $9.90 higher (+0.5%) at $1,841.70/oz, and the US Dollar Index is trading higher at $95.86.

These markets are not reflecting WW3 as the warmongering elites at chatting about IMO.

Looking Ahead: Investors will receive the Conference Board’s Leading Economic Index for January, the S&P Case-Shiller Home Price Index for November, and the FHFA Housing Price Index for November Tuesday.

In due course, another inflation driver should avail itself as a problem: wage inflation.

Crypto is still correlated with the stock market, and anything that happens there will eventually affect the crypto market, as we have seen. Bitcoin looks like it bottomed and is on the rise too. KNIGHTS has not faltered and is trading a $1,101.

Shayne and I believe that the cryptocurrency market will not go lower from the current mark and discard the theory that the market is dead. As with several institutions taking in billions of dollars, it is a good buying opportunity. A look at the on-chain metrics clearly shows that the whales are continuously buying the dip in here.

The FOMCs two-day policy meet will kick off Tuesday and the crypto space would be keenly watching it.

Have a prosperous week, Keep the Faith!

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