The S&P 500 rallied significantly for most of October, but as we head into November, one of the first things we will see is the Federal Reserve’s monetary policy statement. The Federal Reserve is expected to raise interest rates by 75 basis points, but there is a huge bifurcation between traders on whether or not they continue to be very aggressive or if they start to slow the pace of rate hikes. This situation has been further exacerbated by the fact that the Bank of Canada and the Reserve Bank of Australia have recently raised less than expected.

That being said, the market rebounded from the 200 week EMA, which is a technical indicator that many people like. However, we have many areas just above that could cause some resistance, the first being the 3900 level. If we break above, then it is possible that level 4000 will be targeted. The 4000 level is a large, round and psychologically significant number, so I wouldn’t be at all surprised to see this market showing signs of exhaustion in this general vicinity.

  • Below that, the 3600 level should continue to offer some bottoming for the market, and as long as we can stay above that level, it’s likely that the market will continue to see at least some struggle to stay afloat.
  • However, much of this is going to come down to traders interpreting what Jerome Powell has to say before the end of the Wednesday session of the first week of the month.

The market will certainly be very volatile as we approach the end of the year, and I’m already starting here that some of the usual suspects are talking about the “end of year gathering” or the “Santa’s gathering” that so many people cash in on each year in order to inflate their returns for customers. Whether or not we get that is a completely open question at this point, but I still remain bearish until the Federal Reserve stops being so aggressive. At this point, inflation is almost 4 times what the Federal Reserve is looking to achieve, so I believe the Fed will continue to jump on the neck of inflation and therefore remain extraordinarily tight.

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