Stock Market Action: Neutral-Bearish
U.S. stocks are advancing, though on lighter volume. Last Wednesday, the Federal Reserve implemented a substantial rate cut, lowering its target range to 4.75%-5%—a 0.5 percentage point reduction—despite markets trading near all-time highs. Meanwhile, inflation continues to worsen.
The Fed has indicated plans for additional rate cuts in 2024 and 2025, which could result in significantly lower borrowing costs by this time next year, potentially intensifying inflation pressures.
The Market’s behavior since the recent rate cut is reminiscent of its behavior in November 2009, when it sharply declined following news of Dubai’s debt crisis.
The bulls are still in control, but I wouldn’t rush to buy just yet. The $573 level (yellow line), on $SPY, is crucial for the bulls to break. The longer the market stays below $573, the higher the likelihood that the bears could step in and push the market lower.
See the last Technical Analysis post here.
Disclaimer: This analysis is for informational purposes only and does not constitute financial advice.