S&P 500 Technical Set-Up Looking Ominous, Hawkish Fed a Headwind

[MongiIG]

S&P 500 Analysis and News

• Technical Structure Looking Ominous for S&P 500
• Hawkish Powell Increases Headwinds for Risk Appetite

During the final trading session of November, the S&P 500 looks to have formed a gravestone doji, as my colleague highlighted yesterday. This appears when price action opens and closes at the lower end of the trading range. After the candle open, buyers were able to push the price up but by the close, they were not able to sustain the bullish momentum. Therefore, this is typically seen as a bearish signal and thus would suggest that October’s monthly reversal could be somewhat of a bull trap.

How to Trade the Doji Candlestick Pattern

What’s more, the higher high in the S&P 500 had not been confirmed by the RSI, showing a bearish RSI divergence, which adds to the technically weak set-up.

S&P 500 Chart: Monthly Time Frame

Source: Refinitiv

Powell Retires Transitory View

While on the macro front, Fed Chair Powell’s hawkish rhetoric during yesterday’s testimony, whereby Powell stated that it was appropriate to retire the word transitory for inflation, increases headwinds for risk appetite. Particularly now that Powell is on board with the faster taper view, meaning that current market pricing for 2022 rate hikes looks underpriced. As it stands, Fed Fund Futures currently have a rate hike fully priced in for July with a second hike in November. However, with Powell stating that tapering could be wrapped up a few months sooner than mid-2022, I suspect will reprice higher rates in March and May.

FOMC Interest Rate Expectation

Source: Refinitiv

 

By Justin McQueen, Strategist, 1st December 2021. DailyFX

[Kodiak]

"Wall Street bankers and traders are in line for the biggest bonus increases since 2009"

https://www.cnbc.com/2021/11/16/wall-street-is-set-for-biggest-bonuses-since-great-recession-report.html

FA?

[MongiIG]

32 minutes ago, Kodiak said:

"Wall Street bankers and traders are in line for the biggest bonus increases since 2009"

https://www.cnbc.com/2021/11/16/wall-street-is-set-for-biggest-bonuses-since-great-recession-report.html

FA?

Hi @Kodiak

Thanks for the sharing this very interesting article. Huge jumps of projected percent change from 2020.

[Kodiak]

DOW weekly

Support 33 500  - 33 000

[skyreach]

Gravestone Doji

Nice article presented on the S&P500 Doji.

S&P 500 looks to have formed a gravestone Doji last trade day of November

"Wall Street bankers and traders are in line for the biggest bonus increases since 2009"

Margin trading by professionals is at extreme high  -- highest in history. Each time that occurred , e.g, 200 & 2007  we sooner or a little later got a BIG CRASH, followed by a recession Many in the markets are aware of this.

So, it is a wonder:         when is the next major crash?

Any predictions anyone?

Secondly, why do the bankers / traders pay out huge bonuses instead of putting it to reserves for a rainy day, to cope the storms of a market crash?  Afterall, they all should know crashes do occur cyclically.

Thirdly, Traders all know that disciple and money management is all important but they do not truly apply this to their own business management. Despite all the complex Risk management software they have they seem to become a cropper on every major crash. With risk taking at extreme high the signs are on the wall.

 

[MongiIG]

 

All the best - MongiIG