Midterms on Tap. S&P Has a Decision to Make
Some big events are deck over the next 48 hours.
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Our View
Welcome to the chop-shop and that’s exactly what yesterday was. The S&P found some momentum late yesterday, but before that it was a messy day ahead of today’s midterms and Thursday’s CPI reading.
There is a lot of bullishness out there and Goldman's top economist said there’s still a “very plausible” path for the US economy to avoid a recession despite the Federal Reserve’s aggressive tightening and geopolitical uncertainties. And Morgan Stanley said investors should stay bullish on equities ahead of this week’s US midterm elections.
That said, we are still about 325 points off the low in the ES (or almost 10%). Despite the Fed’s “higher for longer” approach and the loss of Big Tech leadership.
For now, we will simply go from level to level. We’re not here to fight the tide; we’re just here to ride the waves.
Our Lean — Danny’s Take
We were right about selling the gap-up open and selling the early rallies, but it was just too 'thin and choppy’ to get any real momentum going.
The 50% retracement held the ES in check yesterday. Even with the late-day push, the ES closed at 3815.25, one point below the 50% retrace at 3816.25.
As for today, Our Lean is to: