[Platinum morning insights] 12.7.22

US stock futures price action is down roughly 0.5% on Wednesday, pushing Wall Street to extend losses as concerns about a longer rate-hike cycle and a looming recession took the driver’s seat. 

The chief executives of America’s biggest companies, including JPMorgan Chase CEO Jamie Dimon, are feeling increasingly sour about the health of the world’s largest economy as it deals with the twin shocks of high inflation and rising interest rates.  “All told, financial indicators point to a recession on the horizon,” wrote Wells Fargo’s Azhar Iqbal in a note to clients Wednesday.

 “The S&P 500 has peaked ahead of recessions with an average lead time of four months over the past few business cycles. Taken together with the inverted yield curve, markets are clearly braced for a recession in 2023.”

We can see this peak in the S&P 500 chart – SPX: Not only has price action failed to maintain a level above the 200-day SMA, it has failed to breach the long-term bearish trend line for the 4th time since January.

 In addition, since early October price action has formed an ascending wedge which we broke though support yesterday. All of our guideline oscillators are rolling over in negative trends and the RSI is now below 50 indicating the momentum is now negative. We may see some price action reversals as markets tend not to go straight up or down, however our next line of support will be found at the 50 day SMA (orange line).  

Today we will get Productivity & Unit Labor (SAAR) data and Jobless Claims on Thursday. On Friday, we will get the Producer Price Index (PPI) and the University of Michigan’s Consumer Sentiment Index. This is just a set up for next week when we will get the CPI report and then the FED Funds Rate announcement. Tighten that seatbelt! Have a Great Day!  This information is for educational purposes only and is not a recommendation to buy or sell a security.