Posted9:30 AM ET – War, inflation and a likely interest rate hike have created market volatility. This is not likely to settle down until the FOMC statement in 2 weeks. Fed Chairman Powell will speak at 10 PM ET this morning.
The US and the EU agreed to freeze Russian central bank assets and this is going to hurt Russia financially. It will also create unrest in Russia as citizens scramble to take money out of their bank accounts. The Russian central bank doubled interest rates over the weekend to 20% (previously 9.5%) and the ruble has lost a third of its value relative to the dollar since the invasion. Russia was also removed from SWIFT (interbank messaging system) which will cripple commerce. Commercial air travel from Russia to the EU and the US has also been halted. International companies have stopped shipping their products to Russia in protest.
Putin will be fighting civil unrest in his own country.
This is a busy week for economic releases. ISM manufacturing was better than estimates (58.6 vs 58 expected). This morning ADP reported that 475K jobs were created in the private sector during the month of February and that was better than the 375K that was expected. This bodes well for Friday’s Unemployment Report. Unfortunately, a strong jobs report could prompt the Fed to hike rates 50 basis points in 2 weeks and good news could be construed as bad news in that context.
I am expecting market volatility through the FOMC meeting on March 16th.
Swing traders are long SPY at $430 from the open last Friday. I like this level and I like the price action the last two days. We need to expect nervous jitters the next few weeks. On a longer term basis, this is a good entry point.
Day traders should expect two-sided action. The S&P 500 has been very choppy this week with long mixed candles and compressions. Avoid trading /ES and stick with stocks that have relative strength and relative weakness. There are great prospects on both sides. Know that the market is choppy and that you have to take gains when they present themselves. This is very much a hit and run environment. Oil prices are spiking and basic material stocks have been very strong.
Support is at $427.50. Resistance is at $438.