BOB LANG: Good morning, Action Alerts Plus subscribers. It's Thursday, September 22, 2022, time for the rundown. Lots to cover today, so let's get to it. So yesterday's big reversal happened right at that important 3,900 level on the S&P 500. We traveled through it for about 5 seconds, seems like, maybe a little bit longer than that. But we had been discussing that level for quite some time, and it's an important level of support and resistance. So for now, it's a really strong level of resistance. Volume accelerated during the sell-off even after a bit of a sharp bounce early on, right after the Fed announcement. Eventually, the market realized the impact of higher rates on business's earnings, employment, and the economy, and we ended up down, closing near the lowest levels of the day. Today, we're down a little bit. This morning we were down quite a bit more, close to 1% on the S&P 500. But we rallied back a little bit here. We'll see what happens. Volatility is elevated today.

It's going to play-- but we know that what's happening with the Fed, it's going to play out in real time in the stock market. End of the month, end of the quarter is coming up-- that's next week-- we have just a little less than seven trading days until the end of the month, end of the quarter. We're going to see a lot of volatility pick up before next Friday's close. So buckle up. S&P 500 is down so far for the month of September, close to 5%. And that's a terrible move after a very, very strong down move in August. So it's basically confirming that down move.

Now talking about the Fed, there was no mistake in the messaging that came from the Fed committee and Chair Powell yesterday. Higher rates for a longer period of time was the clear message that we heard, and that will put the economy in a hole-- in a big hole next year. In fact, the Fed funds futures as predicted by 19 members of the Fed with their guesses have said basically that the Fed funds futures all through 2023 are going to be above 4.4%. Now as an AAP subscriber, what does this mean?

It means keeping that bare playbook handy. Because as long as the Fed is going to continue raising interest rates, the market is going to be facing a bear. What is the bear playbook? Heavy cash, like we have-- we're 27% cash. Using protection-- we use the PSQ and the SH inverse ETFs, probably about 3%, 3 and 1/2%. They've been helping to blunt a lot of the volatility of the rest of the portfolio. Keeping your positions light and cutting your losses when you have them. And lastly, using some defensive plays.

Now finally, ahead of tonight's earnings on Costco, let's take a look at it. It's one-- it's certainly been a name that's been solid in the portfolio for many years. The company is really-- we all know Costco is second to none as a top brand premier retailer out there, even during the economic downturn. We should see Costco continue to perform at a pretty high level. The chart is interesting here. Flirting with that 500 level once again, we talked about that as a possible area where buyers and sellers have a bit of a tug of war.

The midpoint range of the 2022 low's about 400, the high's roughly about 610 to 620. We're nearly oversold here right now since falling about 14% from the August highs. But we'll see what happens after earnings come out tonight. The stock remains a 1 rating in the AAP portfolio, and which is basically a buy at any time. We'll have a chart on Costco a little bit later on today so look for that in your email, and a preview of earnings a little bit later on today.

So that's going to wrap it up for Thursday. Have a great day of trading, everyone, and we'll see you tomorrow.