Stocks moved lower on Tuesday, Aug. 17, with the S&P dropping by 0.7% and the Qs falling by around 0.9%. The declines followed a weak Asian trading session and disappointing US Retail Sales.
Fed Chair Jay Powell did do a live Q&A session yesterday, but it failed to garner worthwhile market-moving news. Instead, it will leave the market waiting until Powell speaks again at the Jackson Hole Symposium, which will take place on Aug. 26 through 28. It will also leave the market to try and read the tea leaves of the Fed minutes to understand what the Fed’s next move may be when that is released today.
Dollar
The dollar index may be about to break out from its current consolidation as it again approached resistance at 93.20. The index has been struggling there for some time. Still, it had momentum in its favor. This time, it approached resistance, not in an overbought or overextended position as it did the last time, with the RSI and MACD both trending higher and indicating a breakout was likely to occur.
Perhaps talk of tapering in the Fed minutes will help push the dollar higher, and a stronger dollar will help the Fed immensely. A stronger dollar will help to pressure commodity prices lower and contain inflation. In fact, at this point, a stronger dollar may be the Fed’s best weapon against inflation. The big risk, of course, is a strong dollar does potentially weigh heavily on global growth.
S&P 500
The S&P 500 managed to fall right to support Tuesday at 4,418 and was able to find a bounce off of that level. But more important was that the advance/decline line really started to show signs of deterioration and was down 4 days in a row and back to levels not seen since the middle of July.
Copper
It is also worth noting that copper had a big breakdown yesterday, falling below a key uptrend that started in March 2020. The breaking of this trend line will need confirmation today, but if the metal continues to weaken, it looks like it could be a huge blow to the global growth narrative. This is likely to grow worse if the dollar continues to strengthen.
Freeport
Meanwhile, stocks like Freeport-McMoran Copper & Gold Inc (NYSE:FCX) fell sharply Tuesday, due to weaker copper prices. It was trending lower in recent weeks and has bearish momentum indicators. The next big support level doesn’t come until $34.60
Ford
Ford Motor Company (NYSE:F) got checked off yesterday as successful, falling to my lower target and hitting $12.75. Anyway. (Ford’s Surging Stock May Fall Following Second Quarter Results).
Boeing
I’m watching Boeing (NYSE:BA) here as it has been consolidating for some time and was quickly approaching support at the 2020 uptrend around $210. That trend line was critical, especially with a gap that needed to be filled at $155.
Taiwan Semi
Taiwan Semiconductor Manufacturing (NYSE:TSM) is probably an essential stock to watch now, as it was nearing a potential break lower with support at $109 drawing closer. I can’t help but think that if one of the biggest semi companies in the world breaks down, it will be a very bad omen for what is to come from the rest of the market.
