18 Dec 2021, 11:08

Last week’s stock market was dominated by news from the Federal Reserve. Finally, we had confirmation from Jerome Powell that the Central Bank could be expected 3 interest rate hikes next year and it will be aggressively reducing its bond-buying stimulus policy. The era of easy money printing could potentially be over, in the face of rapidly-rising inflation. The inflation rate of the US has risen to 6% last month, hence, there is greater among the Fed members to raise rates. Therefore, how did it affect the stock markets?

The S&P 500 index was flat last week during the announcement. As of now, there is no clear signal from the investors regarding their reactions towards the expected hike next year. As of now, the index is still travelling within a channel line. However, do take note that we saw a bounce down last week as the index came to the previous high.

Santa may not be celebrating this year if it breaks below the brown support line in the picture. This could form a bearish chart pattern called the double top. If this happens, we may be seeing a bearish start to next year.

Let watch out and see what could happen in the last few weeks of 2021. This will give us a clue to how 2022 could start. However, we do not expect many stock entries into our portfolio during the next few weeks unless stocks hit their support levels. During the last bounce at the start of Dec, we did not see many stock entries. This could mean that the stock market bull is getting weaker and not many stocks are contributing to the current bullish momentum.

Therefore, we remain cautious and would take a wait-and-see approach as we head towards the end of the Year of the Ox.

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