Was there a FED pivot on 3 Oct?? - Thomas Ng 2 Nov 2022
On Wednesday 2 Nov 2022 12.17pm, I emailed Clients my latest post titled 'Was there a FED pivot on 3 Oct??'.
Below is the full transcript for your perusal:
'Dear Clients . Make no mistake, 2022 has been a rough year for investments as correlations fail and the only 'assets' that are in a bull market this year are the USD Index & bond yields! . I remain steadfast in my views since my last post of the same title and Mr Market has again obliged me very well! So let's get through again my usual style of reviewing what I said last month, what actually occurred and finally an outlook for the next few weeks. . So what did I say on 3 Oct 2022? '..Since Feb 2022 this year, I've set the SPX (S&P500 Index) correction target to be around 3700 as that is the target of the bearish Head & Shoulder Pattern when it fully executes. With the break of June's low on 30 Sep closing coupled with annual Negative Seasonality, I am of the view that price action is simply doing an 'extension' downwards rather than the start of an imminent crash..' . '..Will this cyclical correction thus do the same and continue to extend downwards before doing a mega-reversal to reach, at least, the all time highs?..' . (reference to my 3 Oct post: https://tinyurl.com/iremainsteadfast) . What actually happened? SPX hit a new low but closed at 3670 on 13 Oct 2022. Thereafter, it kicked off a 12% rally to close at 3901 on Friday 28 Oct 2022. . Mr Market has again been too kind to me as excursions below SPX 3700 have been rather short-lived affairs!
S&P500 Index (SPX) Daily Chart, 18-mth
What's next for the month of Nov/Dec? You know the drill - use Thomas Ng's Bollinger Bands (BB) playbook to know whether this Bull has legs or not! So now every pullback within the upper segment of the Bollinger Bands needs to be supported or defended authoritatively by the Bollinger Bands Midpoint line. . If price action manages to get back into the BB lower segment again convincingly, then it's either back to neutral trading range (price action turns into a horizontal zone) OR a new low is yet to be seen. . In any case, there are lots of overhead resistance that Bulls need to blast through to give more confidence that the tide has turned. Let's run thru the few overhead resistance here: . 1. Fibonacci resistance: Currently price action closed right smack at 50% retracement level (from 16 Aug high to 13 Oct low) on 28 Oct 2021. I would love to see Bulls usurping & get into the 61.8% to 78.6% retracement levels (corresponding to SPX 4008 & 4148 levels respectively). . The 78.6% retracement level also marks a confluence of resistance points of sorts, ie it is the meeting point of 2022's downtend channel & previous pre-covid uptrend channel. It is also the 50% retracement level between 2022 high & low points (not shown). . 2. 50-day & 200-day EMA: Currently price action is holding above the blue 50-day EMA but below the red 200-day EMA. A sustained move above the 200-day EMA will definitely 'spark joy' and give more confidence of a low in place. . Let's watch this space & queries welcome. . . On a side note, I'm sure many of you are NOT aware of a certain unscheduled FED meeting held behind closed doors on 3 Oct 2022, under 'expedited procedures'.. More info here: https://www.federalreserve.gov/aboutthefed/boardmeetings/20221003closed.htm . Quote / Unquote:
'..On Monday, October 3, 2022 at 12:15 p.m., a meeting of the Board of Governors of the Federal Reserve System was held under expedited procedures, as set forth in section 261b.7 of the Board's Rules Regarding Public Observation of Meetings, at the Board’s offices at 20th and C Streets, N.W., Washington, D.C. and by audio/video conference call, to consider the following matters of official Board business..' . There was scant news on this in the mainstream & social media. Was there actually a FED pivot being discussed behind closed doors that very night? We can only wonder, wonder, wonder.. Anyway, this week is FOMC meeting again and a 75 pointer cum volatility is expected. How Powell guides on a pivot (if any at all) will likely set the stage whether this spooktacular nascent Q4 rally has legs or not! . As usual, Live Long & Trade Well. . Thank you & regards . Thomas Ng, CMT Principal Trading Representative 首席股票经纪 www.thom-ng.com . #plsreaddisclaimer #chartforillustrationonly #spx2Nov22 #FEDpivot #befluid #wytant #livelongandtradewell Chart source: tradingview Image source: https://www.jmlalonde.com/the-art-of-the-pivo'