To The Moon

U.S. equities demonstrated significant instability on Friday, staging a dramatic recovery after a sharp morning selloff that saw the $S&P 500(.SPX)$ plunge as much as 1.3%. The index ultimately erased nearly all those losses to close with a modest 0.1% decline, while the $NASDAQ(.IXIC)$ reversed its own 1.9% intraday drop to finish with a 0.1% gain.

This reversal was once again orchestrated by the high-flying AI sector. Shares of $NVIDIA(NVDA)$ , a key market driver, tumbled at the open only to stage a strong comeback, pulling broader indexes higher and illustrating the market’s heavy reliance on a concentrated group of mega-cap names.

Fed Uncertainty Creates Policy Vacuum

The market’s unsettled mood stems from persistent anxiety over the Federal Reserve’s policy trajectory. Hawkish commentary from officials, including Minneapolis Fed President Neel Kashkari, has significantly dampened expectations for near-term easing. Traders now assign less than 50% probability to a December rate cut, a stark reversal from the 95% odds priced in just one month ago.

This uncertainty is compounded by an unusual data vacuum. Policymakers are operating without critical economic insights following the recent six-week federal shutdown. The Bureau of Labor Statistics only recently announced that the delayed September jobs report will finally be released next Thursday, leaving investors to navigate markets with incomplete information.

Broad Risk-Off Sentiment Takes Hold

The flight from risk assets was visible across multiple markets. Treasury yields climbed as investors reassessed rate cut expectations, while traditional safe havens like gold declined alongside speculative assets. Bitcoin, often viewed as a sentiment barometer, fell below $96,000 for the first time in six months, reflecting deteriorating risk appetite.

Friday’s wild intraday swings cap a challenging two-week period that has seen the tech-heavy Nasdaq shed $1.74 trillion in market value, putting it on track for its first losing month since March (remember my monthly chart posted starting November and the essential indicator breached). While dip buyers stepped in to prevent another rout, the market’s foundation appears increasingly fragile as it confronts elevated valuations, rising yields, and persistent economic uncertainty.

Navigating Uncertainty with Technical Discipline

In environments like this, where fundamental visibility is limited and sentiment shifts rapidly, technical analysis becomes particularly valuable. Support and resistance levels provide objective reference points for managing risk and identifying potential turning points. This week’s analysis covers 44 major securities across indices, equities, and key market indicators, providing you with clear technical frameworks to navigate the current volatility.

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