Momentum levels and a huge announcement later today could cause a sentiment shift in the stock market. The Federal Reserve has kept its stance on inflation being “transitory” and any mention of change could shift markets. I’ve identified two defensive plays that would benefit from a shift — and more in today’s stock market recap.
In the stock market recap, global stocks were mixed this morning as the world eagerly awaits the Federal Open Market Committee announcement.
The FOMC is meeting for the second day in a row today and has an announcement scheduled for 2 p.m. EDT. Retail sales dropped 1.3% in May. Remember, retail sales make up two-thirds of our gross domestic product. Although disappointing, this could help the case for the Fed to continue adding liquidity to the market by buying bonds.
Analysts don’t expect the Fed to change its “transitory” stance on inflation. They do, however, believe the Fed could hint at future changes in interest rates. This would likely be enough to fuel inflationary fears and cause a sell-off. If we see the bond markets going higher, interest rates would be dropping. This would likely happen with no big Fed changes or hints, and would be good news for tech stocks. If interest rates go higher, investors will wonder if they can get bigger returns from tech or bonds. This would be bearish for tech stocks and bullish for defensive stocks.
The S&P 500 has gone from 90% of its stocks trading above their 50-day moving averages two months ago to only 62% of them today. The S&P 500 has continued on an upward trend despite this, which means that fewer stocks have been driving the index higher. That means the market is increasingly vulnerable. And this usually precedes a pullback.
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) has pulled back near its 50-day MA. SCHN recycles scrap metals and manufactures steel products globally. SCHN has a one-year return of 221.3%. Any mention from the Fed on taking action would likely cause tech stocks to cool off and defensive stocks like SCHN to move higher.
The second play I’ve identified today is a metals and mining ETF with a one-year return of 125.73%. It has also experienced a pullback and may benefit from a sentiment change.
In today’s video, you’ll learn about the imminent narrowing of momentum in the broader indexes… get an update on today’s Fed announcement… whether inflationary stocks will continue trending… whether tech is done rallying or just getting started… and the top stock and ETF on my radar.
What if everyday traders never had to stare at a stock chart again?
So they could just place a simple trade on Tuesday morning… walk away…
That means instead of refreshing news headlines over the weekend or stressing about how the markets will open on Monday…
They’re off for a quick three-day vacation to the beach, a national park or maybe just relaxing!
Thanks to legendary trader Tom Busby finally breaking his silence, everyone now has the chance to grab winning trades and three-day weekends — every week!
I’m talking about gains like 90% on RIOT… 147% on FCX… and even 232% on ORCL.
Check back each morning for Roger’s Radar and the most important news and numbers in the WealthPress stock market recap.