Market Insight – June 15th, 2022.

• ·  S&P500 – S&P 500 Plummets into a Bear Market.
• ·  Fear of biggest rate rise in decades by Feds
• ·  Risk of Instant Recession looming.

S&P 500

On Monday 13^th June, S&P 500 along with the global markets plunged on the fears of a possible recession and entered a Bear market. The US equities markets plummeted by almost 4%. And now they have booked the 5^th straight day of declines by Tuesday. The global markets followed the suit as the major focus of the investors was on the Inflation rate. And the Interest Rate hikes by the Federal Reserve. All asset classes including Bond yields, Stocks, Currencies, Digital Currencies, and precious metals are all exhibiting fear just ahead of Federal Reserve’s interest-rate decision Today. Apparently, investors have already priced in tightening and higher rates faster than what the Federal Reserve would want and what the economy needs at this stage.

Chart Analysis

The above S&P 500 chart shows that the index is falling for the past 5 days in a row. Now the trading is just above the Key Support Level at 3800. However, there are weak signs of holding the selloff at this stage. The picture could become grim after the Rates decision by the Federal Reserve today.  At this stage, there is no signal of Divergence between the Stochastic Oscillator and the indicator is just towards its lowest rate at about -80 points.  We mentioned in our last weekly analysis “The markets are moving towards the FOMC meeting update on Friday we could see some big moves to end this week.” We indeed saw some big wild moves in the markets across the board in the past 3 to 4 days. Now a touch of 3500 support is insight as needs just one good day of the selloff. The chart made a Three Black Crows Bearish candlestick pattern, and it predicts the reversal of the small uptrend we saw earlier in the month of May.

Trade Insights US500

The chart shows Viable Short positions below the Key support level at 3710 with the target of Support Zone at 3580 to 3560. The next support cluster is at 3500 which could hold the selloff apparently.

Alternatively, Long positions above the Major Pivot point at 3810 with the target to head towards the Key Resistance level at 3970.

US Inflation Data

The annual inflation rate in the US has accelerated to 8.6% in May 2022, the highest ever since December 1981. The market forecast was 8.3% lower than the March inflation numbers of 8.5% and matched the April Inflation of 8.3%. Core inflation has slowed down for the second month to 6%, the forecast was 5.9%.

US Inflation Chart

So far, the market was expecting an interest rate hike of 0.5 percentage points, but the resurgence of CPI and Inflation numbers in May to 8.6% has fuelled the growing speculations by the investors of a 75-basis point hike in today’s meeting.  If the Fed decides on a 0.75% increase, then it would be the first since November 1994. The FOMC is due to announce the rate decision today at 1800 GMT.

See Charts of the week