[Analysis] S&P500, a good rally but...
Yesterday, 07 Sep 2022, S&P500 gained 71.68 (1.83%). This is the biggest gain since S&P500 topped in August at 4324. Considering that S&P closed at 3979, it is still down 345 points from August and 840 points from its all-time high.
While the Apple event was the highlight yesterday, its performance was the weakest among the Index heavy weights.
Apple was up 0.93%
In contrast
Google was up 2.47%
Microsoft was up 1.91%
Tesla was up 3.38%
S&P "rallying" 71.68 points is nothing out of the ordinary in terms of its daily Distribution of Return and Standard Deviation. It does not hit the level of "sound the alarm! the beacons are lit!".
An example of a "sound the alarm" rally would be the 3.22% rally on 24 Jun 22, but this rally has run its course. The most recent 3 SD move would be the 3.37% drop on 26 Aug 2022.
Given that the index has already dropped 10% from its recent high and it is testing the crucial level at 3900, a bull defense is to be expected.
4000 is the current resistance. This is the level that bears held on to previously. Can 4000 be breached by the bulls? Absolutely, if there is enough justification and conviction from the bulls. Unlike June's rally, there is not much participation from the short squeeze this round. There is still fear in the market that was instilled by Powell's 180 points drop during Jackson Hole.
4200 is the next resistance level. A major one. Breaking 4200 would mean undoing the Federal Reserve's message.
4000 may not be hard to break, but 4200 will be tough without a change in narrative from the Federal Reserve.
The next CPI data is less than a week away. Rallying into a high-impact data release is often a risky venture and can backfire.
Short-term price action is definitely bullish. If you want to play this, although not recommended, do so with short-term call options. Get out when you have locked some profit.
Mid-term price action and trends are still down. 4200 will be the hard resistance until we have a true Fed Pivot.
While the Apple event was the highlight yesterday, its performance was the weakest among the Index heavy weights.
Apple was up 0.93%
In contrast
Google was up 2.47%
Microsoft was up 1.91%
Tesla was up 3.38%
S&P "rallying" 71.68 points is nothing out of the ordinary in terms of its daily Distribution of Return and Standard Deviation. It does not hit the level of "sound the alarm! the beacons are lit!".
An example of a "sound the alarm" rally would be the 3.22% rally on 24 Jun 22, but this rally has run its course. The most recent 3 SD move would be the 3.37% drop on 26 Aug 2022.
Given that the index has already dropped 10% from its recent high and it is testing the crucial level at 3900, a bull defense is to be expected.
4000 is the current resistance. This is the level that bears held on to previously. Can 4000 be breached by the bulls? Absolutely, if there is enough justification and conviction from the bulls. Unlike June's rally, there is not much participation from the short squeeze this round. There is still fear in the market that was instilled by Powell's 180 points drop during Jackson Hole.
4200 is the next resistance level. A major one. Breaking 4200 would mean undoing the Federal Reserve's message.
4000 may not be hard to break, but 4200 will be tough without a change in narrative from the Federal Reserve.
The next CPI data is less than a week away. Rallying into a high-impact data release is often a risky venture and can backfire.
Short-term price action is definitely bullish. If you want to play this, although not recommended, do so with short-term call options. Get out when you have locked some profit.
Mid-term price action and trends are still down. 4200 will be the hard resistance until we have a true Fed Pivot.
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