Stocks Drop As Fed’s Grip Grows Tighter
Michael Kramer | Apr 06, 2022 01:38AM ET
The S&P 500 fell by roughly 1.25%, while the NASDAQ finished down over 2%. Tuesday's drop quickly erased Monday's advance.
The pattern in the Invesco QQQ Trust ETF (NASDAQ:QQQ) worked out quite nicely, with the ETF returning to the origin of the move higher.
The whole drop started when a usually dovish member of the FOMC sounded very hawkish. That doesn’t bode well for tomorrow when the minutes are released.
From a technical sense, there was something much worse at play here, which was a rising broadening wedge. The QQQ closed just a touch below the bottom trend line, not enough to convince me the pattern had broken down. If it does break down, which I expect to happen, nearly all of the gains from the middle of March will be gone.
The same pattern is present in the S&P 500.
The iShares TIPS Bond ETF (NYSE:TIP) keeps dropping, and it isn’t even oversold yet. Meanwhile, the gap between the TIP and QQQ keeps growing wider. Just watch the TIP ETF.
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The relationship is powerful between the TIP ETF and Amazon (NASDAQ:AMZN). So I’d be rethinking my thesis if you are someone looking for Amazon to go higher.
If there wasn’t enough going on, the dollar index broke out yesterday, rising above resistance around 99.40; the next stop is over 100. I know that is not much of a call, but it is crucial.
By the way, I forgot to mention that there is a Head And Shoulders pattern on the Amazon hourly chart.
Shopify (NYSE:SHOP) has the same pattern.
NVIDIA (NASDAQ:NVDA) has the Head And Shoulders pattern too.
Block (NYSE:SQ) too.
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