Stocks were mainly lower Wednesday, as we saw risk-off take hold of several asset classes. The AUD/JPY traded lower by more than 1% and below a critical level of technical support.
The S&P 500 has been trailing this currency pair by around ten days, and my thought was that it will follow that risk-asset lower to about 4450 over the next couple of weeks.
Additionally, the 10-year failed at resistance again around 1.63%. I think we are heading back to that that 1.5% area of the 10-Yr.
Meanwhile, oil prices were down more than 3% and appeared to be heading to that $76 area we have been talking about.
Also, copper was struggling and down around 3.5%, and was challenging critical support around $4.29, and could fall back to $4.09.
Finally, financial conditions tightened this past week, as we expected to happen as the market began to price in rate hikes and the effects of the stronger dollar take hold.
We also have the challenges of a higher market valuation and growth rates, which are now falling dramatically.
All of this is precisely how we have been laying it out since the late spring. Slowing growth, Fed tapering, a stronger dollar, and now tightening financial conditions. Now we have to wait for the stock market to realize it.
A little different today, with a video from my midday commentary for members of my service Reading The Markets, below is a summary of that video session.