Stock Markets Analysis and Opinion

Stocks Drop As Fed’s Grip Grows Tighter

2022.04.06 11:17

The S&P 500 fell by roughly 1.25%, while the NASDAQ finished down over 2%. Tuesday’s drop quickly erased Monday’s advance.

The pattern in the Invesco QQQ Trust ETF (NASDAQ:QQQ) worked out quite nicely, with the ETF returning to the origin of the move higher.

Stocks Drop As Fed’s Grip Grows TighterQQQ 1-Hr Chart

The whole drop started when a usually dovish member of the FOMC sounded very hawkish. That doesn’t bode well for tomorrow when the minutes are released.

Stocks Drop As Fed’s Grip Grows TighterTweet

From a technical sense, there was something much worse at play here, which was a rising broadening wedge. The QQQ closed just a touch below the bottom trend line, not enough to convince me the pattern had broken down. If it does break down, which I expect to happen, nearly all of the gains from the middle of March will be gone.

Stocks Drop As Fed’s Grip Grows TighterQQQ 1-Hr Chart

S&P 500

The same pattern is present in the S&P 500.

Stocks Drop As Fed’s Grip Grows TighterS&P 500 Index 1-Hr Chart

TIP ETF

The iShares TIPS Bond ETF (NYSE:TIP) keeps dropping, and it isn’t even oversold yet. Meanwhile, the gap between the TIP and QQQ keeps growing wider. Just watch the TIP ETF.

Stocks Drop As Fed’s Grip Grows TighterTIP Daily Chart

The relationship is powerful between the TIP ETF and Amazon (NASDAQ:AMZN). So I’d be rethinking my thesis if you are someone looking for Amazon to go higher.

Stocks Drop As Fed’s Grip Grows TighterAmazon Daily Chart

Dollar Index

If there wasn’t enough going on, the dollar index broke out yesterday, rising above resistance around 99.40; the next stop is over 100. I know that is not much of a call, but it is crucial.

Stocks Drop As Fed’s Grip Grows TighterUSD Index Daily Chart

Amazon

By the way, I forgot to mention that there is a Head And Shoulders pattern on the Amazon hourly chart.

Stocks Drop As Fed’s Grip Grows TighterAmazon 1-Hr Chart

Shopify

Shopify (NYSE:SHOP) has the same pattern.

Stocks Drop As Fed’s Grip Grows TighterShopify Inc 1-Hr Chart

NVIDIA

NVIDIA (NASDAQ:NVDA) has the Head And Shoulders pattern too.

Stocks Drop As Fed’s Grip Grows TighterNVIDIA Corp Daily Chart

Block (Formerly Known As Square)

Block (NYSE:SQ) too.

Stocks Drop As Fed’s Grip Grows TighterBlock 1-Hr Chart

Source

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