It was a choppy week of trading for the indexes, with all the major ones losing ground. The Dow Jones industrial average had the best relative strength, while small caps and the Nasdaq lagged.
Market players were hoping for momentum to build after a big bounce on the consumer price index report last week, but a parade of Fed speakers made hawkish comments and kept the action contained. The odds that the Fed will raise rates by a half percentage point bounced around between 75% and 85% this week, which is the "pivot" that the market was hoping for, but the problem is that this really isn't a pivot.
Fed speakers have made it very clear that the battle against inflation is ongoing, and rates are still going higher. There may be a slower pace of hikes, but they may last longer.
In addition to the debate about inflation, retail sales reports this week caused some concern about slowing growth. Walmart (WMT) put up strong numbers, but Target (TGT) was disappointed, and both indicated that there are still substantial obstacles ahead.
Next week is the Thanksgiving holiday which typically performs well. Traders tend to pursue more speculative action, but in the context of the current bear market, it may not be as boisterous as it has been at other times. Traders are worn out by this market and are more risk-averse than usual.
Bulls are still hopeful that a small hike in December, softer CPI, and positive seasonality will help to propel the market higher for a while, but the Fed is putting up some obstacles, and the economic picture is not very attractive.
The price action this week was mixed, but the bulls did manage to make a few positive thrusts and did a fairly good job of battling the Fed. The question, though, is whether they will be in a holiday mood next week.
Have a good weekend. I'll see you on Monday.
"Trading" - Google News
November 19, 2022 at 04:28AM
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Choppy Week as Investors Set the Table for Holiday Trading - RealMoney
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