S&P500: Balance sheet extends drop.Will interest rate peak soon?

1 окт. 2023 г.

The S&P500 has been declining for more than two months straight reaching the HL trendline from the market bottom. It is useful to look into the Fed's role on this whole long term price action and what better timeframe to use than the 1W.

As you can see, the Fed's Balance Sheet (orange) is extending a long term decline that started more than one year ago, while the Interest Rate (teal) continues to rise. You don't need to go back any further than the 2018-2019 period, which was marked by the extensive trade wars between the U.S. and China. The key to recovery was when the Interes Rate peaked and flatlined. That was when the stock market bottomed and growth stability returned to the markets.

The recent (almost) two year inflation crisis has the market in an even more advantageous position as it's been one year since it recovered and priced the bottom, despite the fact that the Interest Rate is still rising. Theoretically when the Interest Rate peaks and turns flat, we should see a more stable stock market growth.

With the S&P500 on a HL support and the Balance sheet still dropping, do you think the Fed will pull the trigger and soon announce in one of their next meetings an end to rate hikes?

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