Markets Begging for Good News: Where Can it Come From?

09/27/2023

2 minutes read

2023.09.27 04:09

We compiled a list of the 10 biggest uncertainties in the stock market right now.

In no particular order:

China-trade wars and chip wars
Oil and food inflation
Strikes
Government shutdown
Corporate and individual bankruptcies on the rise
Commercial real estate and banking
Fed rates higher for longer
Political polarization
Social Unrest-how far can folks be pushed economically
Geopolitical concerns-Russia and how far will they go

What we do know is that the market is not a big fan of uncertainty.

Hence, until there is some glimmer of hope, we expect fear to prevail.

That leads us to speculate on where might hope come from.

In 2011, the government shut down. By October 2011, the market bottomed along with TLT (yields began to soften.)

was at $100 a barrel and in 2012 fell to $80.

The accommodative Fed helped save the day. Plus, oil had very different fundamentals than today.

Now though, with $33 trillion in debt and rising inflation, if the Fed softens, it will help commodities prices and drive the economy towards stagflation.

We speculate that the could fall as well.

In 2011 FED had wiggle room and much less of a debt issue.

Now, not so much.

We show the chart as this is most likely where hope can emerge from.

Can AI and tech help efficiency while soothing the ailments of the day?

Over the weekend we looked at volatility, retail, and small caps and came up with this as the Bottom line:

“A move over 18.00 or the 200-DMA in , coupled with more downside pressure in () and (watch momentum), could spell another leg lower perhaps to 170 in IWM and 57 in XRT.

Then, we look at the monthly charts and our 80-month moving averages on both, which have held since the heart of COVID.”

Volatility cleared 18. Neither XRT nor IWM have hit the levels mentioned on the monthly chart yet.

Looking at the NASDAQ or chart, thus far it is the only index holding the August lows.

QQQ-Daily Chart