S&P 500 (SPY) Report – 02/22/23

Good morning traders!

The S&P 500 ($SPY) is trading below yesterday’s close. Let’s get into it…

The stock market experienced its worst daily drop since December on Tuesday, with all three major U.S. stock indexes falling at least 2%, ultimately wiping out all of the 2023 gains for the Dow Jones Industrial Average so far. Traders now estimate a 21% chance of a 50-basis-points hike at the central bank’s March meeting, a significant change from 0% a month ago. Deutsche Bank analysts predict that the federal funds rate at the end of the year will increase 12.5 basis points to 5.19%. Even though the selloff happened on a day with little economic data, J.P. Morgan analysts suggest that the stock market could reach its peak for the year in the first quarter, and the fallout from the Federal Reserve’s monetary tightening may still be forthcoming. The Tuesday selloff may have already indicated the stock market’s peak.

Investors and traders are increasingly worried about higher interest rates causing more stock market pain. The Federal Reserve’s minutes from the last meeting may further fuel these concerns. Although the Fed had lowered rate hikes to 25 basis points after larger increases last year, mixed inflation data has caused traders to expect more rate hikes. This shift has pushed bond yields higher and weighed heavily on stocks. Investors will scrutinize the tone of Fed officials in the minutes and look for any concerns around loosening financial conditions. With more inflation data coming, investors may have more opportunities to worry after the minutes are released.

Long Trade Ideas:

  • Markets experienced major selling yesterday which may lead to short sellers taking profits. We are watching for a bounce into the 50D SMA at ~$402.72 on a 1hr chart, as well as the 200D SMA on a 4hr at ~$401.97.

Short Trade Ideas:

  •  The 50D SMA at ~$402.72 on a 1hr chart, as well as the 200D SMA on a 4hr at ~$401.97, are a few areas where we might see some resistance for a short trade.

Note: Moving averages are reported from the previous trading session and will change during the next trading session. 

Wednesday Economic Events:
MBA Mortgage Applications 7:00am ET
Redbook Sales 8:55am ET
FOMC Minutes 2:00pm ET – High Volatility Expected
API Crude Oil Data 4:30pm ET

Fed Speaker Scheduled:
John Williams 5:30pm ET


DailyBubble’s Disclaimer
This article provided by the DailyBubble team should only be considered as informational and/or entertainment by the reader. DailyBubble makes no representation to buy or sell any security or financial instrument within the article. Readers seeking investment advice should seek independent financial advice from a professional, and independently research and verify. The DailyBubble team wrote this article and may express its own opinions therein.

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