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Stocks Rally As Markets Position For A Return Of The Doves

By Michael KramerStock MarketsSep 08, 2022 04:47AM ET
www.investing.com/analysis/stocks-rally-as-markets-position-for-a-return-of-the-doves-200629534
Stocks Rally As Markets Position For A Return Of The Doves
By Michael Kramer   |  Sep 08, 2022 04:47AM ET
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KBH
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TSLA
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TSM
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Stocks finished the day higher yesterday in a repeat of the Jackson Hole episode. Stocks rallied sharply on Aug. 25, the day before Powell. Stocks rallied sharply yesterday, a day before Powell. The market was pretty intense right from the start and seemed to find something in Fed Vice Chair Brainard’s speech today to latch on to, like “the risks will become more two-sided at some point.” Gee, very revealing.

SPX 5-Min Chart
SPX 5-Min Chart

So let’s call this a short-covering rally or, better yet, a positioning event. Because the risk isn’t that Powell is Hawkish, the risk is that he is dovish. And that is the mentality of how the market thinks. Could the index rally say 4,020ish, then turn lower and fill the gap at 3,840? Sure, that seems possible.

Is Powell like to be dovish today? Probably not.

SP 500 1-Hr Chart
SP 500 1-Hr Chart

IEF/LQD

Powell can’t afford to be dovish. In one day, the IEF/LQD ratio wiped out three days of gains, which is another way of saying that it took three days for financial conditions to tighten and one day to ease back to where they had started.

IEF/LQD Daily Chart
IEF/LQD Daily Chart

Taiwan Semi

Taiwan Semiconductor (NYSE:TSM) has always been an outstanding stock to watch because it tends to be a good leading indicator. There is support at $78 for TSM, and if that goes, the next level to watch is the gap at $75.50 and the July lows.

TSM Daily Chart
TSM Daily Chart

KB Home

The KB Home (NYSE:KBH) chart looks similar to that of Taiwan Semi.

KBH Daily Chart
KBH Daily Chart

Tesla

Tesla (NASDAQ:TSLA) was up yesterday, calling into question my breaking of the neckline on the Head And Shoulders. The answer is that I don’t have one yet. I could have drawn the neckline too low, which doesn’t change the fact that there is a gap to fill at $247. So, it is probably best not to change my thought process around a further drop.

Tesla Daily Chart
Tesla Daily Chart

Original Post

Stocks Rally As Markets Position For A Return Of The Doves
 

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Stocks Rally As Markets Position For A Return Of The Doves

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Comments (5)
Mario tragik
Mario tragik Sep 08, 2022 8:57AM ET
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That tells you markets want to go up more than down. The bull forces are stronger. Its like if it would buffer the ****to stsy in the same place and no go further down.
Fred Berdach
Fred Berdach Sep 08, 2022 7:48AM ET
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Markets fixated on clueless Fed officials who have flooded markets with « magic monopoly money »and now are caught up in their own mess .Whichever they act , the outcome is either a deep recession or runaway inflation , or both .This is what happens when politics and central banks mingle .
TALLURI ANJANEYULU
TALLURI ANJANEYULU Sep 08, 2022 6:55AM ET
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MARKET HAS ITS OWN WAY.EVERYTHING ELSE SEEMS TO BE A POSTMARTEM.
jason xx
jason xx Sep 08, 2022 5:20AM ET
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nobody cares about ief/lqd anyway
jason xx
jason xx Sep 08, 2022 5:19AM ET
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Market is way to fixated on every word the fed speaks as if there is all that much difference between a 50 and 75 now. Inflation is falling that's what matters. CPI will set the trend Tuesday
 
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