Why Are Stocks Weak Again?

[ETF Daily News]( September 14th, 2023 SPONSORED AD [5 Stocks - 10%+ Yields]( Investing in dividend stocks might sound boring, but it works. It's how some of America's richest families have built and kept their fortunes. That's why we just released our latest report -- 5 Stocks Paying 10% Yields. Each opportunity comes from a different sector of the market. From energy to real estate to emerging markets - these are 5 companies that nearly guarantee returns for years to come. [Click here to download]( [Why Are Stocks Weak Again?]( My expectation of a trading range forming is playing out right on schedule. That being where resistance was found at 4,600 for the S&P 500 ([SPY]( which was simply too high after an overextended bull run. On the other hand, there was no need for stocks to sell off more than 5%. Thus, support was found just above the 100 day moving average currently at 4,344. Moving Averages: 50 Day (yellow), 100 Day (orange), 200 Day (red) In a trading range scenario, the market is overly susceptible to each new headline. One day that blows bearish…and the very next day gloriously bullish. In short, almost every move inside a trading range is meaningless noise. And thus should mostly be ignored. That is because the VAST MAJORITY of the time, the market breaks out of the range in the same direction it was going before the range formed. In the current case that means we should break higher out of this range unless there is truly a threat to the bullish thesis. That would require that the preponderance of the evidence starts to show that the odds of a recession have greatly increased. That is currently not true. What is true is that we find that the recent economic data is a bit better than expected. Normally that is awesome news that has stocks spiking higher. Unfortunately, that is not so awesome when the Fed is worried about lingering high inflation not fading away quickly enough. Simply stated… The more robust the economy looks > the stickier high inflation becomes > the more likely the Fed raises rates even higher > the more they risk creating a recession instead of soft landing Indeed, the recently improved economic picture has also increased the odds of a Fed rate hike at the November or December meetings. Just a month ago only 28% odds were placed another 25 basis point from the Fed. As for today that is now up to 46%. This again explains the stock market weakness this week. Let me be clear…The improved data for ISM Services and Jobless Claims this week, that sparked the most recent sell off, does increase the odds of more rate hikes. But as Goldman Sachs predicts, the odds of a new recession forming in the next 12 months is still only around 25%. That means we are much more likely to have a soft landing which keeps the long term bullish thesis in place. At this stage investors are likely going to react strongly to other upcoming economic events coming into… Continue reading at [INO.com]( NOTE: If URLs do not appear as live links in your e-mail program, please cut and paste the full URL into the location or address field of your browser. [Privacy Policy]( | [Terms & Conditions]( This email contains a paid advertisement.This is not a solicitation for the purchase or sale of securities. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice, prior to making any investment decision. Advertisements and sponsorships are provided as a service to Stock News users. Stock News is not responsible for their content, services or products. The statements and opinions contained in this advertisement are not those of Stock News, and Stock News disclaims any liability for or arising from such statements and opinions. You are hereby advised that Stock News is receiving a fee as compensation for the distribution of this advertisement. [Click here to unsubscribe]( Copyright © 2023 ETF Daily News, part of StockNews.com - POWR Stock Rating, Market Outlook & Investment Insights Magnifi Communities, 1 Penn Plaza, Suite 3910, New York, NY 10019