As outlined in yesterday's note, there were a handful of subtle clues going into today's Powell speech pointing to a run of this magnitude.
You can find the text of Powell's speech in various places today, I'm not here to summarize what was said.
The bottom line is that we are nearing the end of the rate hike cycle, with the possibility that a 50bp hike in December will be it for rate hikes, barring a final 25bp hike in February.
Markets have been in the process of front running a pause since the October lows.
Here is where the markets stand as of today, beginning with the S&P:
Perfect move up over the 200 day moving average accompanied by a volume spike after a picturesque low volume consolidation.
The recent consolidation only bolsters the argument that 4100 will fall in rapid fashion. I am expecting the SPX to consolidate around 4200 going into the FOMC in a couple weeks. From there, as Powell further rings the dovish bell, a price target of 4500 for the S&P by year end is not at all out of the question.
Big volume breakout on the NDX today. Targeting 12500-13000 in the short-term.
Lastly the USD Index:
USD Index (DXY) is on the verge of another major downleg. The economic data over the next couple of days, combined with CPI data due prior to the FOMC decision should aide in getting this down much further, which will bolster risk assets significantly.
Expecting December to set the table for a Q1 that will be shock and awe campaign for equities we have rarely witnessed.
Prepare accordingly.
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