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Stocks Drop Ahead Of The U.S. Fed Interest Rate Decision

By Michael KramerStock MarketsJul 27, 2022 03:30AM ET
www.investing.com/analysis/stocks-drop-ahead-of-the-us-fed-interest-rate-decision-200627677
Stocks Drop Ahead Of The U.S. Fed Interest Rate Decision
By Michael Kramer   |  Jul 27, 2022 03:30AM ET
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Stocks fell sharply yesterday ahead of the FOMC meeting. The S&P 500 was lower by 1.15%, while the QQQs dropped by almost 2% due to a stronger dollar, and the earnings pre-announcement by Walmart (NYSE:WMT). Adding to the pressure, Shopify (NYSE:SHOP) announced it was laying off 10% of its workforce.

It would appear that the S&P 500 head and shoulder pattern was correct, the index fell below the neckline, and that line held as resistance for the rest of the day. I think the index continues to go lower to fill the gap at 3,830.

S&P 500 5-Min Chart
S&P 500 5-Min Chart

VIX

The VIX did finally move up yesterday and managed to close around 24.7. It is not surprising to see the VIX rise, given that there is an FOMC meeting. Honestly, I would have expected it to be much higher. Going into every FOMC meeting this year, it has been above 29. This is by far the lowest closing price for the VIX this year, one day before a meeting.

VIX Daily Chart
VIX Daily Chart

Dollar

The DXY is in an interesting position heading into the FOMC, sitting below resistance at $107.20. It will be interesting to see what happens today and where the dollar goes. If it clears resistance and holds it, I think the dollar could go back to its recent highs.

USD Index 1-Hr Chart
USD Index 1-Hr Chart

Alphabet

Alphabet (NASDAQ:GOOGL) reported results that came in below expectations but weren’t a disaster, so the shares rose slightly. But the stock is reeling at the bottom of the flag pattern I pointed out the other day. I’m not sure these results change much. The company is noting FX headwinds, tough comps, and a pullback in ad spending as potential third-quarter headwinds.

Alphabet Inc Chart
Alphabet Inc Chart

Shopify

Shopify (NYSE:SHOP) reports today but announced it was cutting 10% of its workforce yesterday. That sent the stock sharply lower, back towards support. The stock has been trading sideways for months, and the RSI is powering higher, creating a bullish divergence. As long as the stock can stay above $29.5, I think it is building a base. If that support breaks, then I don’t know.

Shopify Inc Daily Chart
Shopify Inc Daily Chart

Adobe

Adobe (NASDAQ:ADBE) has been consistently rising in a trading channel over the past few weeks. But overall, a long-term channel is falling and a longer-term downward trend in the RSI. If the stock can hold on to $380, it can churn higher. If not, the shares may fall towards the lower end of the long-term channel.

Adobe Inc Daily Chart
Adobe Inc Daily Chart

Microsoft

Finally, Microsoft (NASDAQ:MSFT) traded higher after the company said it was looking for full-year double-digit revenue growth; expectations were about 14%. The company downgraded its outlook for the fiscal first quarter based on analysts’ expectations, but shares jumped. It makes zero sense to me, but after-hours trading is a joke most of the time anyway. So let’s see if it holds today.

MSFT Daily Chart
MSFT Daily Chart

Have a good one.

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Stocks Drop Ahead Of The U.S. Fed Interest Rate Decision
 

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Stocks Drop Ahead Of The U.S. Fed Interest Rate Decision

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Comments (6)
Mario tragik
Mario tragik Jul 27, 2022 8:27PM ET
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See, do not listen ONLY to biased bears like Kramer, gather more info from other sources. It is always more likely that the market rallies rather than crash, that is the nature of the system whether you believe it or not. do not be naive nor biased. if you listen to this guy you would be destroyed today 7-27. It does not matter if there are mysterious reasons or the market is manipulated, price is king and if it goes up it because it goes up. You nor Kramer nor any mortal knows whats next they can just make probable guess, never forget that.
Mario tragik
Mario tragik Jul 27, 2022 9:17AM ET
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this did not age well
buff24seven 365
buff24seven 365 Jul 27, 2022 7:01AM ET
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the Markets are looking for any good news to Rally. the only problem is 31 trillion debt has caught up to the fed they got no choice but to keep raising rates into a recession. the fed is so far behind right now its slickening.
David Beckham
David Beckham Jul 27, 2022 5:40AM ET
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All in put easy
Adamo Nals
Adamo Nals Jul 27, 2022 4:11AM ET
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Buy qqq puts. Trust me. Simple clear head and shoulders reversal to the downside
Matt Cavagrotti
Matt Cavagrotti Jul 27, 2022 4:11AM ET
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The after hours action has potentially negated this, look at futures up 1+%. Bulls always find a way to win, it disgusts me. The Q's will give some or all of the AH gains back tomorrow, but everything hinges on the FOMC meeting tomorrow. Stocks are primed to rip face if they raise by only 75 bps and the guidance isn't too bad. Sickening, really.
Zman Trading
ZmanTrading Jul 27, 2022 3:42AM ET
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Thanks Michael!
 
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