In this week’s Chart Attack, Equity Guru’s Vishal Toora delves into the Federal Reserve’s recent interest rate hike and the state of US regional banks. Vishal discusses the technical charts and market ranges, as well as the impact of the Fed’s decision on the banking sector.
Vishal notes that while the Fed raised interest rates by 25 basis points, there was a bit of a hiccup with regional banks. However, at the time of recording, there was an amazing recovery. Vishal highlights that the markets on the technical charts continue to maintain the range, and we are waiting for direction.
The technical analysis shows that the SP 500 had a big strong bounce at the major support zone. While the Nasdaq was similar, there could be a breakout confirmed by the end of the day, largely thanks to the earnings from Apple. The Dow Jones broke down but had an amazing recovery, leading some to believe that the market may do a fake out and potentially break out to the upside. Meanwhile, the Russell 2000 bounced from a support level on that range.
Vishal notes that the Fed did not mention any sort of pause, but the financial media is calling it a hawkish pause due to certain statements that were left out of this FOMC meeting. The omission of a statement which has been in multiple Fed statements is the committee anticipates that some additional policy firming may be appropriate. This keeps the door open, as the Federal Reserve is in between where they can keep raising rates if they have to, or they can pause if higher interest rates are affecting the banking sector and causing some issues.
From a technical analysis perspective, the US regional bank’s ETF is still in a downtrend, indicating that there could be more headlines that we could be seeing from the regional bank. Vishal notes that a lot of people are watching the regional bank charts here. So we’ll see if those headlines develop.