The S&P 500 Staggers Toward More Fed News
The S&P 500 has bounced from its January 24 low as investors focused on corporate earnings. But now it’s staggering as attention shifts back toward the Federal Reserve and inflation.
First, consider the potential hanging man candle on February 2. Like January, was the high made early in the month?
Second, that potential reversal pattern occurred at both the January 10 low and the 100-day simple moving average. Both previously represented support. Have they become new resistance?
Third you have the bearish gap on February 3, which prices have remained firmly below.
Fourth, yesterday was a bearish inside day.
Fifth, the 8- and 21-day exponential moving averages (EMA) remain in bearish alignment. Also notice how the index closed below the 8-day EMA yesterday.
Finally, SPX has remained above its 200-day SMA in the last three sessions. A break below that line may trigger more selling.
Returning to the calendar, most of the big names have already reported earnings. Two Fed voting members speak tomorrow (Michelle Bowman and Loretta Mester). January’s consumer price index is on Thursday morning. Minutes from the January 25-26 meeting follow next week (February 16). Those events may shift sentiment back toward the central bank’s hawkish monetary policy.
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Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
First, consider the potential hanging man candle on February 2. Like January, was the high made early in the month?
Second, that potential reversal pattern occurred at both the January 10 low and the 100-day simple moving average. Both previously represented support. Have they become new resistance?
Third you have the bearish gap on February 3, which prices have remained firmly below.
Fourth, yesterday was a bearish inside day.
Fifth, the 8- and 21-day exponential moving averages (EMA) remain in bearish alignment. Also notice how the index closed below the 8-day EMA yesterday.
Finally, SPX has remained above its 200-day SMA in the last three sessions. A break below that line may trigger more selling.
Returning to the calendar, most of the big names have already reported earnings. Two Fed voting members speak tomorrow (Michelle Bowman and Loretta Mester). January’s consumer price index is on Thursday morning. Minutes from the January 25-26 meeting follow next week (February 16). Those events may shift sentiment back toward the central bank’s hawkish monetary policy.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradingView is not affiliated with TradeStation Securities Inc. or its affiliates. TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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