Morning Market Update Monday, September 19, 2022

Providing Market Insights and Returns

The market continues to fall this morning after a horrible week. DOW FUT -0.82%, S&P -0.89%, NAS -1%, Gold -0.80%, Oil -2.7%, and the US 10yr +5bps @3.5%. The 10yr now sits above 3.5%, the highest level in over 10 years, a significant move and breaking out of strong resistance. Asian markets ended in the red. European markets are in the red and the UK is on holiday for the Queens funeral. Oil fell as the dollar continues to rise as investors show concern of a slowdown with the continued rate hikes coming on Wednesday. The UAE has accelerated a plan to raise oil production to use more of their reserves before the world makes the green transition. They are hoping to pump 5mmbpd by 2025, ~1mm barrel increase to their current capacity. Iran’s president made statements about a need for US guarantees of a deal, seeming like we may be at yet another stand still with that deal. China reopened Chengdu which caused an early rally in crude but has since reversed.

Big weeks of economic news with all eyes on Wednesday. Markets pricing in 75bps but some are suggesting a 100bps move.

The SPX saw its worst week in months, and we saw some of the worst single day drops since 2020. Plain and simple it was ugly out there with no where to hide last week. Internally we continue to see deterioration heading into a very important week of economic news. 47% of the SPX members are at a 4-week low, a mayor increase from the beginning of the week. Only 25% of SPX members are above their 50dma, a level too low if we want to see a rally in the other direction. ADV/DEC was nothing crazy with -2.8 to 1. Friday was a triple witching day, with huge volume and a bearish end to the day. With much awaited news from the Fed on Wednesday and the market flashing bearish signals in a downtrend, we believe that the market will continue to head lower and ultimately test the July and/or the June lows. Staples and Utilities continue to act defensive.

Market News: Biden decaled that the pandemic is over in his 60 minutes interview. Brazil coffee bean supply hit record low, another sign of supply shortages. The Euro energy crisis continues to cause pain for citizens, recently a Germany bakery was hit with a 300k euro gas bill. Hundreds found in a mass grave in Ukraine, causing further outlash against Putin. The Senate approved a bill that will boost American military support for Taiwan. Additionally, Biden said that US military forces would defend Taiwan from “an unprecedented attack”, which likely will be adding fuel to the fire. China will sanction the CEOs of Boeing and Raytheon, as a result of the US intervention in Taiwan.  Crypto continues to fall with BTC below 19k and ETH falling to $1,300 after the recent merge not doing enough to boost the excitement.  Hurricane Tracker: Puerto Rico got hit by hurricane Fiona sending the entire island into a blackout and with no internet connection. Fiona will move north towards Newfoundland. Tropical storm Madeline is currently south of Baja and will head into the Pacific.