Daily Commentary: April 06, 2022

Jeremy Engelbrecht1Option Commentary

Market Was At A Critical Point Yesterday – Now We Know the Answer

Posted by Pete Stolcers on April 06
www.1option.com
 

From a technical standpoint yesterday was a critical juncture. The market would either confirm a bullish flag formation or it would confirm the downward sloping trendline off of the recent high. The price action turned ugly after comments from a Fed official and the SPY closed below the 100-day MA. This morning the 200-day MA is being challenged.

The FOMC minutes will be released this afternoon. These hawkish comments have been circulating since the FOMC meeting a few weeks ago. An accelerated balance sheet run off and the possibility of two consecutive 50 basis point rate hikes is nothing new. I believe that the relief rally we saw the last few weeks was premature and that it got over-extended. Now we are going to see selling pressure.

The domestic economic data has been good. ISM services and ISM manufacturing were generally in line with expectations and the employment numbers were solid last week.

China is another story and I have been citing my concerns. Overnight we learned that the Caixin Services PMI fell to 42.0 from 50.2. This is a massive drop and it is due to the Covid-19 shut downs

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