Will S&P 500 reclaim key resistance levels? An analysis of market realities

Monica Kingsley Monicakingsley

S&P 500 internal breadth deterioration signs didn‘t lie, and the index took a dive – till the dip got of course bought. The sectoral view was though nothing to write home about.

Remember the key points made in yesterday‘s extended video. Still, I looked for a reprieve in sentiment, leaning risk-on into non-farm payrolls. Markets seemed fearing a strong figure, yet the heavily loaded boat tilted the other way in the aftermath of not really finest NFPs.

Initial relief over the Fed maybe getting second thought about hiking (in July), is giving way to questioning the realities of why it wouldn‘t hike (maybe perhaps even pivot, in market‘s mind). Then, the gut level reaction to rally as liquidity won‘t be getting that bad in the very short-term, is likely to win – especially in real assets as the same mechanic would take more effort to kick in in the S&P 500.

In favor of an extended introduction to today‘s analysis, I‘ll focus on individual charts, Twitter commentary, and of course another video to top off it off.

Have a great weekend in advance!

Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 4 of them.

S&P 500 and Nasdaq outlook

4,460s are the nearest support turned resistance to reconquer, and a good battle seems at hand later today. In order to achieve that, 4,432 level can‘t be broken or thoroughly tested, which opens the way to 4,415 last line of defence.

NYHL were indeed what I correctly trusted – the warning signs were there, and now it‘s up to the sectors given in the preceding chart caption, to do their job as much as Russell 2000.

Author

Monica Kingsley

Monicakingsley

Monica Kingsley is a trader and financial analyst serving countless investors and traders since Feb 2020.

AUD/USD holds above 0.6950 as bullish USD caps gains

AUD/USD edges lower during the Asian session on Tuesday, stalling a two-day recovery move from a two-month low, touched last week. An extended rout in the fixed income market keeps US bond yields elevated near multi-year highs. This, along with geopolitical uncertainties, helps the US Dollar retain its bullish tone despite receding October Fed hike bets. However, expectations for another RBA rate hike this month could act as a tailwind for the Aussie.

USD/JPY rises back above 158.00 despite hawkish BoJ outlook

USD/JPY rises back above 158.00 in the early European morning on Tuesday. The pair strengthens as the Japanese Yen fails to find any inspiration from hawkish BoJ expectations and looming intervention risks. Meanwhile, geopolitical uncertainty and elevated US bond yields keep the US Dollar near its YTD high despite receding October Fed hike bets. This, in turn, helps the pair stay supported.

Gold recovers further from two-month low amid some USD profit-taking

Gold builds on its modest intraday bounce from the $4,100 neighborhood, or a two-month low, and climbs above $4,150 during the first half of the European session. The US Dollar pauses for a breather following the recent strong rally from the September monthly swing low and offers some support to the precious metal. Adding to this, receding bets on an October Fed rate hike benefit the non-yielding bullion.

Ripple and Stellar weaken as derivatives positioning fades

Ripple (XRP) and Stellar (XLM) face pressure trading below $1.499 and $0.220, respectively, on Tuesday after a modest correction at the start of the week. Traders should be cautious as weakening derivatives metrics and fading bullish momentum suggest further corrections for XRP and XLM. Derivatives data shows a weakening and cautious signal among traders.

Europe in focus as French and Spanish politics drive sentiment

There are no tier-1 releases today. Focus will remain on developments in the European markets and geopolitical developments in the Middle East. In France, the key issue in the coming days will be whether the Socialists and Marine Le Pen's National Rally signal they are willing to topple the government over the budget.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.