Market on Edge as Fed Decision Looms | September 16, 2024

This week could be pivotal, with the Federal Reserve’s decision in focus. The market is split on whether a rate cut will happen, highlighting the Fed’s challenge in balancing inflation control with economic support. This uncertainty is mirrored in the bond market, where low yields show investor caution. Any surprise from the Fed could lead to significant market moves.

The dollar’s recent drop suggests the market expects a more dovish Fed, which could hint at economic worries. While a weaker dollar often helps stocks, it also raises concerns about the broader outlook.

Crypto assets are showing some weakness, with Bitcoin down about 2% after a brief rise last week. Last week was a strong one for Bitcoin, but as I’ve mentioned before until it breaks and holds above the key pivot line of $61,000, a pullback is likely. Bitcoin reached that level and was rejected, which shows the accuracy of the technical analysis. This pivot line, the midpoint of the channel, is crucial.

If Bitcoin breaks above it and confirms, we could see a quick move up. But as long as it stays below, the risk of a pullback remains. While we might see some bounces within the channel, the focus should stay on that pivot line. It’s the key to whether Bitcoin moves higher or continues to drop.

The S&P 500 is at a critical point, trading in a range that has seen significant action in the past. Despite potential resistance, momentum still favors the bulls, with the market possibly testing record highs soon.

The NASDAQ tells a different story, with lower highs and a forming triangle pattern suggesting consolidation. The direction of the breakout from this pattern could signal the next big move in tech stocks.

AI remains crucial to the market, though it’s been quieter lately. Nvidia’s strong performance last week gave a boost, but the broader AI sector has been more subdued. As we move into the later part of the year, tech driven by AI will need to meet high expectations to keep the market on an upward path.

The market is at a turning point, with mixed signals from different indicators. The Fed’s actions this week and any shifts in the broader economic picture will be key. A cautious approach is wise, keeping a close watch on how these factors develop.