Market Remains Oversold on Long-term Indicators | Market Reaction Post-FOMC

Here is today’s Youtube video covering the recent price action developments. See additional premium update below:

 

Following the elevated CPI reading for May 2022, short-term yields spiked considerably (along with the Eurodollar futures which broke down below a very important line of trend support). In other words, the elevated CPI reading took the short-term rate market by surprise and led to a substantial rise in fed hike expectations:

 



CPI by gameoftrades_yt on TradingView.com

This led to market participants increasing their rate hike expectations for today’s meeting to a 75 bps increase. The SP500 moved down considerably in anticipation of that rate hike (this is covered in the youtube video), this explains why the market is flat today despite the Fed “surprising” the market with a 3/4 point increase.

Everything that was covered in the video remains very much true. The only additional development since the video was filmed is the 2 year yield showing signs of cooling down in the near term:



Short term yields reversing by gameoftrades_yt on TradingView.com

Seeing follow-through on this move would decrease the odds of seeing a “waterfall” capitulation event and increase the odds of seeing a durable bottom form around current levels. This is a very near-term development and is not particularly useful without seeing a bigger decrease in inflation expectations which would very likely be fueled by a breakdown in oil:



USOIL by gameoftrades_yt on TradingView.com

We’ll be posting a premium video tomorrow regarding our current tactical strategy on the SP500.

 

Do you mind sharing more details?

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3 comments

  1. (2) 2
    Maxrothira says:

    Peter, I love this hybrid where the youtube video has extra explanations and charts, especially with events like today. And such a quick response! In the future, could new posts be on top? I get confused especially when the email system glitches. Thank you. EDIT: make sure all the boxes are checked under notifications. Somehow my youtube got unchecked. Thank you GOT!

  2. (0) 0
    Allin323 says:

    Thanks for the extras on YouTube videos. I think it was a lacking part for members that you just fixed. Thank you !

  3. (0) 0
    Maxrothira says:

    Did the fed say something to spook the markets this morning after the rate hike?

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