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Sunday, November 27, 2022

Fed Spurs Initial Buying, Now Let’s See Where the Chips Fall

The Fed pretty much said what everyone thought it would say on Wednesday, and, apparently, it was good enough to spur some initial buying.


It’s always amazing to see confirmation of the same thing that we all knew, and no one really thought was bullish for the market, to create some buying. Essentially, the Fed confirmed it would shrink the balance sheet, raise rates, and end asset purchases.


Perhaps, the headlines did not include a word that algorithms find bearish or included a phrase interpreted as bullish, but people don’t react that quickly for what amounts to affirmation. Earnings headlines? Yes, but the Fed headlines are driven by programmatic buying. Unfortunately, I still follow the concept that the first move often fades the following day. That means I’m not excited to see us pop immediately post headlines as I now think we’ll be starting at $350 to $351 on the PowerShares QQQ Trust ( QQQ)  by the end of the week. I hope I’m wrong.


Intel ( INTC)  has a chance to cement the move higher though with its earnings report. Although it isn’t quite the market mover it was when it was a member of the Four Horsemen, the semiconductor industry has been under supply shock pressure for some time. If INTC sheds any optimism on the industry as a whole, it should be enough to get the semiconductor index moving. Of course, Intel has its a fight on its own hands with Advanced Micro Devices ( AMD)  and Nvidia ( NVDA) .


My preference is to see the QQQ test $350 to $351 post-Fed, hold, and set us up for some optimism from Intel and maybe even some positivity from Xilinx ( XLNX)  and ServiceNow ( NOW) .



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