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Stocks Rally Ahead of U.S. Fed Minutes

By Michael KramerStock MarketsNov 23, 2022 03:44AM ET
www.investing.com/analysis/stocks-rally-ahead-of-us-fed-minutes-200632687
Stocks Rally Ahead of U.S. Fed Minutes
By Michael Kramer   |  Nov 23, 2022 03:44AM ET
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US500
+3.09%
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DX
-0.27%
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VIX
-5.98%
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The market rallied on yesterday as volatility, and the dollar fell sharply. The VIX dropped to 21ish yesterday and almost filled the gap created on Aug. 19. Despite the bullish day, the one interesting thing is that options traders didn’t see it that way. The deltas on the SPY were massively negative yesterday, suggesting that traders were buying puts and selling calls. That is not a bullish options activity; that is bearish options active.

HIRO vs Stock Price
HIRO vs Stock Price

It is also evident that with the VVix trading slightly higher yesterday and at the bottom of its range, and the VIX trading around 21, it is getting very cheap to start buying protection again. Additionally, the last few times, the VIX was in this low 20 range; it came right at the time of the Fed minutes.

You have to ask yourself if the VIX will go sub-20 between now and year-end. That is also knowing that the Fed minutes come out today. Powell is talking on Nov. 30, a CPI release the second week of December, and an FOMC meeting the next day. While also being fully aware that a falling VIX helps to ease financial conditions, which is precisely the opposite of what the Fed wants.

VIX Daily Chart
VIX Daily Chart

As for the S&P 500, I still think we have a downside risk here of around 3,750. I don’t see a case for markets to continue to rise. Which is also precisely the opposite of what the Fed keeps telling us they want. At this point, this seems like a common retracement to me.

SPX Chart
SPX Chart

Or the end of a potential extension. So if the market rally wants to end here, the Fibs certainly make a strong case for that.

SPX 1-Hr Chart
SPX 1-Hr Chart

Meanwhile, the dollar moved down yesterday, giving back some of the gains from Monday's, which also helped to boost equity markets as financial conditions ease when the dollar falls. It almost looks as if we have formed a bull flag now in the dollar, indicating the dollar still has further to climb.

USD Index Hourly Chart
USD Index Hourly Chart

Original Post

Stocks Rally Ahead of U.S. Fed Minutes
 

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Stocks Rally Ahead of U.S. Fed Minutes

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Comments (4)
Logan CALDER
Logan CALDER Nov 23, 2022 11:19AM ET
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I would say, at this point, if you don't get the "big drop" started you should re-assess your basis for opinion, this is multiple weeks of miss. I was following along until around 2 weeks ago, and although I agree with your points, the market hasn't
Mario tragik
Mario tragik Nov 23, 2022 11:19AM ET
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thats the thing qith kramer, he just looks one side. and justifies wherever to keep his bias instead of opening up. I do not still understand why people get fixated on just one side. markets do not move that way.
David Beckham
David Beckham Nov 23, 2022 11:03AM ET
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Ok all in long no need to say anythjng
Mario tragik
Mario tragik Nov 23, 2022 7:57AM ET
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you use HIRO? Im starting to change my views about you. maybe you are serious after all.
shaik rashed
shaik rashed Nov 23, 2022 3:51AM ET
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Dow johns today or tomorrow 1000 points down
Tomas No
Tomas No Nov 23, 2022 3:51AM ET
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Nah, 10k points down
 
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