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Painted Bodies, Viking Horns and the S&P 500

Morning in the Markets

Briton Ryle by Briton Ryle
December 14, 2022
in Analysis
0
Painted Bodies, Viking Horns and the S&P 500

American football fans among falling confetti

Because it’s a human construct, the stock market is prone to the same kind of wild emotional swings that make human behavior unpredictable at times. Yesterday’s action is a fantastic example of this…

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As I finished yesterday’s message, pre-market futures were flying higher, up around 3% across the board. Sure, the CPI was good news, there's no doubt about that, but sheesh. Investors were acting like a bunch of college freshmen at their first homecoming football game – bodies painted, hats with Viking horns, yelling and flexing at every TV camera that pointed their way…

The S&P 500 opened trading at 4,069 – firmly above the 200-day moving average – and within 20 minutes, it was challenging recent highs at 4,100. 

Again, yesterday’s CPI number was very good news. It suggests that companies aren’t passing every penny of their higher costs on to the consumer, and it also suggests that inflation is cooling a bit more quickly than economists thought. But should that be enough to signal a new uptrend the day before a Fed announcement?

That’s probably asking too much. And cooler heads prevailed. The S&P 500 reversed at 4,100 and dropped below the 200-day moving average. It didn’t dip into the red as the Dow Industrials did. But the message was clear: wash off the body paint and take off those stupid hats. 

And by the end, we ended up with moderate gains, perfectly aligned with the news we got. It was a good day, just not that good.

Some people will look at a day like that and get nervous. After all, stocks did reverse big gains, and the S&P 500 failed at its 200-day MA. I would caution against bearish actions based on yesterday’s trading. Think of that explosive move higher as a probe. Buyers are waiting to pounce above the 200-day MA. And the bulls did not simply abandon the market and leave it to the bears. 

So I think we will likely see a sustained move above the 200-day MA (which currently sits at 4,033) sometime soon. That is if the Fed sticks to the script. And the entire belief that Chair Powell will stick to the script when he announces the Fed’s latest interest rate move later today. 

One other thing of note: Meta (NASDAQ: META). Meta held on to the lion’s share of its gains yesterday. This is a very positive sign for the stock. The stock closed yesterday in the middle of the range between its 50-day MA (which sits at $116.44) and its breakout point at $125. 

That’s your “Morning in the Markets” for today.

Take care, and I’ll talk to you tomorrow. 

brits-sig

Briton Ryle
The Profit Sector

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Tags: Consumer Price Index (CPI)META (NASDAQ: META)Moving AverageS&P 500The Fed
Briton Ryle

Briton Ryle

I’ve been trading, investing, and sharing my insights with individual investors since 1998.  Back then, the internet was not a very useful research tool. Armed with a library card and a huge budget for the printer, I’d scroll the microfiche for Wall Street Journal and Financial Times articles. I bought technical books on wireless technology and fiber optic networks. I traveled to Chicago to learn the secrets of stock options trading directly from the experts on the floor of the CBOE.  I’ve attended and spoken at more investor conferences than I can remember…. All because I’ve always taken my responsibility to my readers and subscribers very seriously. I refuse to parrot popular opinion, offer up half-baked ideas or publish incomplete or half-hearted research.  There is no shortcut to deep research... becoming as close to an expert on topics, trends, and technology as possible. And the rewards are life-changing. The very first stock I ever recommended was South Korea’s SK Telecom. My readers enjoyed a 150% profit in a matter of months.  And after 25 years, I’ve helped tens of thousands of readers change their financial fortunes.  A few months ago, I donated all my suits to Goodwill, pulled my name off the list of speakers for the big investor conferences, and left the big city for Southern Georgia. The plan was to retire to the banks of a tidal creek that splits off from the St. Mary’s river as it enters the Atlantic between Cumberland and Amelia islands... and trade stocks when I felt like it. But, I guess retirement wasn’t for me after all. I’m back, and this is gonna be something special. 

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© 2022 The Profit Sector, LLC. All rights reserved. Our website provides stock market research, commentary, and analysis. Information is provided “as is” and solely for information purposes, not for trading purposes or advice.

Nothing on this website should be considered personalized financial advice. Any investments recommended herein should be made only after consulting with your personal investment advisor and only after performing your own research and due diligence, including reviewing the prospectus or financial statements of the issuer of any security. The Profit Sector, its managers, its employees, affiliates and assigns (collectively "The Company") do not make any guarantee or warranty about the advice provided on this website or what is otherwise advertised above. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. The Company is not affiliated with, nor does it receive compensation from, any specific security. To the maximum extent permitted by law, the Company disclaims any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations provided herein prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.

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