US stock market

The Federal Reserve has announced that they will not be raising interest rates and that they do not plan to in the foreseeable future. Chair Powell kept repeating that the economy is in good shape. The dovish surprise was great; besides the downgrade of growth, inflation, and interest rates we now know that the quantitative tightening (QT) program will be decreased to $35 billion per month from previous $50 billion. QT is when the Federal Reserve sells assets it has on its balance sheets. All the stocks and bonds it bought over the quantitative easing program (QE) it has been selling since 2018. Which could have caused the fall in the stock market. Besides all this, the next move from the Fed may be a rate cut!

The equity market has also taken to correcting its pricing. Stocks grew on the news of rates not rising in the near future them quickly fell at the end of the day. This is the same move we saw after the first time the Fed led on that they will not be raising rates like the said they would. Now stocks are poised to retake September highs with the help of the Fed.

The opposite scenario is also probable. The SPY showed us signs of topping out last week. Now we see more evidence in a bearish shooting star formation and a negative RSI divergence. If we close below 281, we could potentially see another slide to the downside.