MBCC Trading Highlights 10th October'22 - Market is right back down to 3650, now what?

The market traded back down to its key 3600-3650 level after touching the top end of resistance around 3800. It failed right at resistance on the 20 day moving average at 3800 and moved back down. The catalyst was the non farm payrolls that came out showing much better at 263k, much better than the consensus of 255k. This slightly better than expected number gave the market a reality check as it just means the Fed does not have the ammunition it needs to hold back on raising rates! Every time the market cheers that the “Fed is done”, that rally in and of itself just gives the Fed more reason to keep on going. As we have said all along, the rallies will be capped for now until something changes.

What is that something? What are our cross asset models telling us?