BOB LANG: Good morning, Action Alerts PLUS members. It's August 29, 2022. Monday's rundown. Lots to cover today so let's get to it.
So technicals today are looking still rather weak after Friday's drubbing. Markets were down more than 3% on Friday on some pretty elevated volume. Levels of volume we haven't seen in over two months. Of course, we did see some clues as to what might be happening on Friday from the prior Monday when the S&P 500 was down about over 2% and then on the prior Friday before that, more than 1%.
Of course, a lot of people were hinging upon the comments from Chair Powell at the Jackson Hole conference on Friday, hoping that he would say something that was a little less hawkish-- not necessarily dovish, but certainly something in a way of trying to confirm maybe a pivot that might have happened in July.
And of course, we've been talking about this for over a month now and saying that there was no pivot. There was no hesitancy from the Fed. They were gonna go ahead and continue to raise interest rates and be very aggressive on their interest rate policy. And this is just something that Chairman Powell re-affirmed And markets took it on the chin for the better part of a week.
We've had two straight down weeks in August. And as the early part of the week, we were still up for the month of August. And with three days left to go in the month-- today, tomorrow, and Wednesday-- we see the S&P 500 is still down close to 2 and 1/2%.
Of course, today, markets are down a little bit less than a 1/2% right now. The S&P 500 is down about 15 points as we speak. The other indices, like the Russell and the Dow industrials are off a little bit less than that.
So we'll see what happens. We are a little bit oversold on the short term right now. Oscillators didn't quite get to extreme readings on Friday. They were down quite a bit, but they're starting to bounce back a little bit here today.
And again, as we come up to the end of the month, we do see what often happens is a lot of what's called "window dressing." And what is that? We see a lot of markups in prices as investors, and hedge funds, and mutual funds strive to get some names in their portfolio before the end of the month.
But let's make no mistake, this is still a bear market, as we talked about last week. Last week, we did set up some targets to the downside of about 3,950, and then even below that to about 3,900 if this selloff continues into September.
We do have jobs report coming out later on this week. We have the JOLTS tomorrow. And so there's gonna possibly some surprises, some good earnings actually coming out as well, too, including a name in our portfolio, which is ChargePoint.
So as far as the Fed or the economic data is concerned now, the Fed funds futures are portraying now about a 66% chance of a bigger rate hike coming in September. Now, of course, September is the big meeting, right? Then why is that?
It's because obviously we're going to try and figure out whether it's going to be 50 or 75. And if it's 75, that brings the funds rate up to 3%, which is almost in line with the 10-year Treasury, which means that one more rate hike, if bonds don't continue to selloff, is going to push the Fed funds rate above that rate and invert the curve.
There's a lot of hesitancy right now in trying to figure out what Fed policy is going to look like going forward. I think what the chairman said on Friday and a couple other Fed governors said earlier in the week was that they were looking for Fed funds rate to push up to be anywhere from 3.5%, to even possibly 4%.
But it's not just the rate that's the big concern. The Fed Chair and the other Fed governors kind of portrayed the fact that they were going to keep rates higher for a lot longer period of time. So anybody who is thinking about rate cuts coming in 2023, that idea has been squashed like a bug over the past couple of days. So we can't look for rate cuts coming in certainly until inflation is down to their target range of about 2% to 2 and 1/2%.
So as far as earnings are concerned, again, we have ChargePoint coming out tomorrow and also a name we're indirectly aligned to, which is CrowdStrike, which is the largest holding in the CIBR, C-I-B-R ETF, which is what we hold in the portfolio. So it would be interesting to see how that stock does after earnings tomorrow night.
And again, we have jobs report coming out later on tomorrow. And later on in the week, we don't have the ADP on Wednesday, but we do have the NFP coming in on Friday. And they are looking for a pretty hot number coming into the end of the week.
All right, so that's going to be a wrap today, everyone. Have a great day and we'll see you guys tomorrow.