September 23, 2022

Markets:

Stock futures were lower on Friday to close out another losing week as investors fear the Federal Reserve’s aggressive hiking campaign to fight inflation will lead to an economic downturn.

Friday is set to be the fourth negative session in a row for the major averages. The Fed on Wednesday enacted another super-sized rate hike of three-quarters a point and indicated it would do another at its November meeting.

Bond yields have soared this week following the Fed’s actions, with the 2-year and 10-year Treasury rates hitting highs not seen in more than a decade. Stocks that would suffer the most in a recession have led the losses this week with the Consumer Discretionary Select Sector SPDR Fund off by more than 5%. The Real Estate Select Sectors SPDR Fund is down by 6%.

The 2-year Treasury yield has continued its march higher, topping 4.2% in overnight trading. The U.S. dollar is also continuing to climb which could weigh on U.S. multinationals. The dollar move comes as the U.K. unveiled new economic measures to revive its economy. Oil is also falling with WTI futures now off by 3.3%.

Portfolio:

We enter today's session holding positions in TDOC and AG.  Remember the trend lines we pointed too and now we broke and held below. Short term; S&P looks to be headed towards 3400. That's the next line we are looking at. One note of caution for those who wish to trade daily moves: it's Friday. Do not be surprised if we have a short-term bounce at some point today. We are oversold but technically we just broke. Lots of work needs to be done to see positive flow. Quarter ends in one week, can see a lot of sectors continue to break and flush out before we have a meaningful rally. But 3400 on the S&P looks like a magnet right now. We have the range we wanted now, that we continued to wait for and over the next few weeks we will expose every opportunity to end this year strong. Keep an eye on Crypto as well, could see another massive flush towards 12k on Bitcoin. Another sector the continues to trigger here, commodities. Surging U.S. dollar will crush this sector further. Just a few thoughts as we prepare to attack this market early next week with the quarter ending. Let's have a great session.