Equities were left a flaming wreck after Jackson Hole (see chart below), with S&P 500 falling ~7% in the ensuing two weeks. But have since managed to stage a bounce in the last few days.
Fortunately, the technical damage could be limited, if stocks manage to sustain a bounce from here. As shown below, using "simple trendlines," we can see that both:
- S&P 500 and NASDAQ Composite both respected the trendline in place
- since June 2022
- in our view, June 17, 2022 was the date of fundamental capitulation
- as that was the date inflationary pressures reached "maximum upside acceleration" on the heels of a strong May CPI, plus negative U Mich consumer inflation survey, plus Fed decided to move to +75bp hike
- and this recent pullback touched that corresponding trendline
In fact, taking a further step back, stocks have seemed to find footing along the trendline connecting the March 2020 lows and June 2022 lows. Thus, even as challenging as the last few weeks have felt, one could suggest the uptrend/bull market remains solidly intact.
Even with bad September seasonals, a roadmap exists for positive catalysts into month-endThe August CPI released on 9/13 is particularly important for markets. And it looks like the inflation-swaps a...