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2022 October 4th EST Daily Memorandum

Disclaimer:

Nothing contained in the following content constitutes an offer, solicitation, or recommendation regarding any investment management product or service, or the offer to sell or the solicitation of an offer to buy any security; The following content is purely for information only and is based on information available at the time it was created. It does not take your financial situation or goals into consideration, and may not be suited for you.


Table of Content
  1. Current Thesis

  2. Executive Summary - prior day as the anchor

  3. Today at Close - Higher Level Overview & Analysis Based on Our Quantitative Indicators for selected Indexes & Indicator heat charts

  4. Expectations & Analysis for Tomorrow in Detail

Current Thesis

The thesis of interest rate hikes will continue to govern trades from the current to earlier next year. The highest projected terminal rate is expected to be around 4.51 - 4.70%. As a result, rising rate hike expectations continue to drive the underlying credit market-related indexes. The general thesis for the remaining year is outlined in the following article: Is Volcker Shock Coming Back?


Executive Summary

We see significant downside risk to the S&P 500, NASDAQ, and Dow Jones Industrial Average and remain bullish on the credit market and reverse index as indicated in the 2022 September 27th EST Daily Memorandum for the long term.


Impacted by policy changes 1. UN asked all central banks to halt rate hikes 2. UK tax cut U-turns 3. Fed announcement indicating the interest rate hike starts to see results, the credit market adjustment has deepened, which may return to the prior memo 2022 September 28th EST Daily Memorandum set up on credit market for the short term. Today, the market continues on the technical pullback on 4-hour charts as indicated by the memo on September 30th and 2022 on October 3rd. With the August US higher than expected PCE and the EU sliding into recession on PMI numbers, how the market reacts to the unclear policy turns may still take time to materialize. Further, we may not see central bank actions materialize in the short term as the UN does not have the ability to directly affect the decisions of individual central banks. As long as the US dollar continues to be the world reserve currency, the ultimate decision still depends on Fed. We are far from out of woods and is still very bearish except for temporary relief rallies.


For setup tomorrow:

 

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