Weekly Chart Review

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This will be a big week with the Fed on tap to cut rates for the first time since the emergency rate cuts associated with the pandemic.

The market can’t seem to decide whether or not it will be a 25 or a 50 basis point cut.

In the image below, you can see that as of yesterday at 1:50 pm CT, the market was pricing in a 52% chance of a 50 basis point cut and a 48% chance of a 25% basis point cut.

On Friday (09/13), the probabilities were evenly split, 50%/50%, between a 50 and 25 basis points cut. In short, this could go either way.

The market (and the FOMC for that matter) typically does not like this much uncertainty this close to the rate decision (09/18).

With that said, I believe there’s a better-than-decent chance that we see an article or a tweet from WSJ correspondent (and unofficial Fed mouthpiece), Nick Timiraos, sometime on Monday which will help “clarify” which way the Fed may be leaning for the meeting on Wednesday.

My personal opinion is that the Fed should cut 25 basis points (if at all). I think a 50 basis point cut signals that the Fed is more concerned about the economy than they are letting on and that could spook the market.

S&P 500 Index

The S&P 500 had a strong week last week rallying +4.02% after falling -4.25% the previous week.

Interestingly, as you can see from the zoomed-in chart below, the S&P 500 didn’t do much more than close where it opened the week before.

For the S&P 500 to achieve the inverse Head & Shoulders target (5,723) described in the chart below, it needs to start by eclipsing 5,670 which was the previous market high.

My guess is that Monday and Tuesday turn out to be a nothing burger as the market awaits the Fed’s decision but Wednesday through Friday could see some volatility (either positive or negative) as the market responds to the Fed’s decision.

The “chart-o-palooza” is back!

After tons of positive feedback, I am back with what will now become a monthly chart pack.

To read more about the methodology and thesis behind these charts, please go here.

Lastly, if there are additional charts that you would like to see next month, please do not hesitate to let me know by replying to this email or by leaving a comment.

S&P 500 -