As I write this at midday on Friday, 10 March, the ASX 200 is down 140 points and looks like it will close on the lows.
If there’s anyone who shouldn’t be surprised by the path of markets over the last month, it should be those of you watching my Closing Bell updates.
I have set out for you in detail what the levels were that you needed to watch, and I have pointed out where momentum would start picking up steam to the downside.
The S&P 500 broke beneath the 200-day moving average on Thursday, so the stage is set for some explosive moves.
The employment and CPI figures in the US are, of course, the key bits of data that will influence the Fed’s rate rises going forward, so they will be the catalyst.
If the employment figures released last night showed that the economy is turning down, we may have seen a big relief rally as expectations of future rate rises are lowered.
Then we’ll have to navigate the CPI released next Tuesday in the US.
But if the employment data was strong, the stage has been set for markets to sell-off aggressively.
Last week, I titled my Closing Bell video ‘Short the Banks’ because the technical situation in them was looking particularly bearish to me.
The news that Silicon Valley Bank [NASDAQ:SIVB] dropped 60% after asset sales and a steeply discounted capital raising was out of left field saw US banks under pressure.
Perhaps the issue will be contained, but it could be a canary in the coalmine.
After a year of doing not much at all, it looks like equity markets might be ready to start flying around again.
My hope is that we see another large wave to the downside, as reality sets in that the sharp increase in rates will push economies into recession — and then it will be time to start buying.
Until next week,
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Murray Dawes,
Editor, Money Weekend
