Quite frankly, it’s a bit of a pipe dream to expect around how to change things, and if the Republicans take over Congress completely, people start to look at the idea of tighter fiscal policy as a real possibility.
- The S&P 500 initially had a very good look to it during the trading session on Tuesday but turned around quite rapidly as it got out that FTX was being saved, which sent this market higher, only to see sellers come in and crush it has a small crypto exchange only has so much of an actual influence on some of these bigger markets.
- A lot of people will continue to look at this through the prism of “risk on/risk off.”
Stock markets are crashing again
I think we continue to see a lot of noisy behavior between now and Thursday, as the CPI number will be the main thing that people pay close attention to. After all, the only thing that Wall Street cares about at this point is whether the Federal Reserve is going to loosen monetary policy. Quite frankly, it’s a bit of a pipe dream to expect around how to change things, and if the Republicans take over Congress completely, people start to look at the idea of tighter fiscal policy as a real possibility. After all, Jerome Powell is a Republican.
Regardless, I think this is a market that has had a nice little bounce, but quite frankly it looks like we are trying to give up that gain after just a couple of days. If the market were to break down below the 3700 level, then it’s likely that we could go down to the 3600 level. The 3600 level had been supportive previously, and therefore think a lot of people will be paying close attention to it. With this being the case, I think it’s probably only a matter of time before we see that area tested again. If we were to break down below there, then it’s likely that the market could go much lower.
In the meantime, I think we’ve got a situation where the S&P 500 is struggling for a good reason, as tight monetary policy and a slowing economy will continue to work against risk appetite. However, Wall Street is always looking for the next “narrative” that can cause people to buy stocks going forward. Ultimately, I think you can expect to see a lot of choppy and noisy behavior, but really at this point it’s difficult to get overly confident with any trade, so short-term trading only.