“The charts, as interpreted by Jessica Inskip, suggest that the broader market might be in for a bumpy ride as we exit bear market rally mode,” he said.
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Major Wall Street indices closed over 1% lower on Tuesday continuing their downward trend from Monday. Concerns regarding recession weighed on investors’ minds after stronger-than-expected economic data triggered speculation the Federal Reserve will continue on its rate hike path, increasing the chances of recession.
The SPDR S&P 500 ETF Trust SPY closed 1.44% lower on Tuesday while the Vanguard Total Bond Market Index Fund ETF BND ended 0.33% higher.
Chart Analysis: Cramer highlighted the S&P 500 daily chart to explain Inskip’s analysis. “Inskip believes the market’s gains from mid-October through the end of last week was a bear market rally — in other words, a temporary bounce in a larger downward trend,” he said according to the report.
The expert also noted that the market is at the mercy of the Federal Reserve’s interest rate hikes, and the central bank’s inflation strategy is beholden to the labor market, the report said.
“Inskip thinks we went right back into bear market mode,” Cramer said adding, “The S&P can still escape from this new trajectory, but she won’t have much confidence in a bounce unless we blow through last Friday’s levels.”
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