S&P 500 Technical Analysis
The early hours of Tuesday witnessed a subdued S&P 500, with a lack of significant economic data guiding market movements throughout the day. As a result, it wouldn’t be surprising to observe a relatively calm S&P 500, particularly with the upcoming events later in the week drawing closer. The focal point is now on the Tuesday session, which hosts the FOMC meeting and, more importantly, the crucial interest rate decision. However, the spotlight is likely to shift towards the subsequent press conference, where investors will closely examine the Federal Reserve’s future plans.
Currently, a significant debate revolves around the potential for further interest rate hikes and the duration of the tight monetary policy. This debate holds considerable sway over investor sentiment toward the S&P 500. Additionally, the market is displaying signs of potentially forming a rising wedge pattern, adding an extra layer of intrigue to the situation. Friday’s session featured a sizable candlestick, hinting at the possibility of a downward move to close the gap that began last week.
Adding weight to the argument for the bottom of the gap as a potential target is the presence of the 50-Day Exponential Moving Average in the same vicinity. A breach below this critical level would certainly mark a negative turn of events, potentially paving the way for a descent to the 4400 level or even the 200-Day EMA.
In the broader perspective, the S&P 500 appears to be burdened with uncertainty. However, much of the market’s direction hinges on developments during Tuesday’s press conference featuring Jerome Powell. Notably, the Fed Funds Futures indicator currently indicates a mere 3% chance of interest rate hikes during the ongoing Tuesday meeting. Nevertheless, looking ahead, the odds seem to favor rate hikes.
As the market grapples with these uncertainties, it’s crucial to stay tuned to upcoming events, especially Wednesday’s FOMC meeting and the ensuing press conference. These developments are poised to exert significant influence over market sentiment and direction. In this climate of heightened ambiguity, adaptive and astute strategies are essential for navigating the S&P 500’s current landscape. Remember that much of what we see in the S&P 500 and other indices is a response to monetary flows and options flows. Fundamentals take a back seat, with technical analysis potentially coming into play as well.
For a look at all of today’s economic events, check out our economic calendar.