Strong retail sales data, will the FED slow down the interest rate hikes?
- 17 November 2022
- Posted by: Federica Montella
- Categories: eToro CopyTrader, Investing
Strong retail sales data
Major U.S. indexes dropped yesterday following the retail sales report.
The data showed that retail sales were up strongly in October, above expectations.
This is a sign that the U.S. economy is strong, therefore the Federal Reserve will likely continue to increase the interest rates to reduce the high inflation.
Mary Daly, San Francisco Fed President, said that a pause in rate hikes was “off the table”.
Investors are also looking at the Treasury yield curve, which is currently inverted, and this is historically a signal that the economy might fall into a recession.
S&P 500 Technical Analysis – Daily Chart
The S&P 500 price is still trading inside an ascending channel.
Following the news regarding the retail sales data and the possible Fed decision about interest rates, the S&P 500 index price dropped to 3900 and is currently testing the support line at the same level.
There are two possible scenarios:
- if the support at 3900 can hold the price, we can expect a price jump to the range between 4050 and 4100, respectively the 200-day MA (green moving average) and the trend line of the bear market
- if the support will not be strong enough to hold the price we can expect a drop to around 3800, the 50-day MA (red moving average).
In the short term, the recent price action looks bullish, however, the price is still in a bear market.
If the price can break above 200-day MA, it would be a very bullish signal that will push prices even higher and the market could flip potentially to a bull market.
The RSI dropped to 55 remaining in Bullish mode.
Market Sentiment – Fear & Greed Index
The market sentiment remains in the “Greed” mode, at 59, down from yesterday, following the recent drop.
FedWatch Tool – FED rates probabilities
80.6% of investors are expecting the FED to increase the interest rates by 0.50% in the next meeting.
The remaining 19.4% are expecting a 0.75% rate increase.
More investors are now expecting a 0.75% interest rate increase.
No other options are considered at this stage.
The next FED meeting is on 14 December 2022.
Portfolio Update
Overall, the majority of my positions are bullish (LONG). I have a few short positions opened recently that I am monitoring and waiting for the right time to close or I could add more shorts if the price reverts to the downside.
Right now I am neutral on the stock market, as the price can go in any direction in the short term.
I am keeping my risk score low and I have some cash available on balance to use for new trades.
If you are already copying my portfolio, please keep the copy open.
If you are thinking of copying me, now could be the right time, if you can invest for the long term (years).
Remember to copy the open trades to optimize the copy.
Remember to set the stop loss on the copy at the minimum level, so you don’t get stopped if there is a correction.
Thank you, everyone. Have a nice day!
Steps to follow to copy my portfolio automatically:
1. Create an eToro account here: https://federicamontella.com/go/etoro/
2. Verify your account and make a deposit of at least 200 USD (you can deposit in any currency, like GBP and EUR)
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4. Start the copy (copy open trades and set the lowest stop loss possible, to allow some movement)
5. Enjoy, it’s all automatic. You will make passive income 24/7
Let me know if you have any questions.
Federica Montella
eToro Popular Investor
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