Finally the indices had a strong follow through day last Friday which cemented a weekly cycle and daily cycle bottom! The rally from the 06/17/22 low is very similar to the rally out of the 03/14/22 low. The Fed deliberately killed the rally out of the March seasonal low by communicating clear intentions to tighten financial conditions to combat inflation.
Last Friday was a quadruple witching day and the NASDAQ traded 42% over its 50-day average volume. The NASDAQ failed to make a new intraday low while the DOW and S&P 500 each made a fractional new intraday low. The NASDAQ closed just a little bit above its 200-week moving average last Friday.
Even though the United States is a capitalist system with a free market where asset price discovery is conducted orderly, but the cost of money is decreed by the Fed. The cost of money fluctuates depending on the Fed’s policy. If the Fed is easing, the cost of money is low. If the Fed is tightening, the cost of money is high.
Last Thursday the NASDAQ was up 2.69% and the next day it was down 2.47%, although both days had light trading volume. It’s very unusual for the indices to trade like this. It’s a period of heightened uncertainty. Global markets are in the beginning of a fundamental shift after a 15-year period defined by low interest
