What is happening
As usual there are 2 points of view on the direction of the Indices from here.
Chart guys are calling for a reversal. Stock indices traditionally sell off dramatically and in a genuine down trend rally back firecly (short covering) but fail and return to new lows.
$spx big level approaching. No coincidence the 4 big resistance points just above all coinciding. 50 SMA 61.8% fib Descending DTL and the blue uptrend.
My Chart Guy says
Big debate is dead cat bounce vs lows in. Looking at prior similar sells that bounced to re-visit lows (Feb 2020, Oct 2018, Feb 2018 etc) they all retraced between 50-60% of the rally before dropping Currently, thats between here-4570ish in #ES_F. Reaction there will be deciding
Macro guys say
Inflation will subside when supply chains sort themselves out, huge growth as economies finally reopen, FED has our back (slow rate rises, swift action if stonks crash….), excellent earnings.
The FED speakers are being dovish, mostly. Generally saying they will fight inflation but they do not want to cause problems for the stock market.
Melt up is underway
Single stocks earnings
Alphabet/Google had excellent results and rallied 10% AH (after hours). They announced a 20-1 stock split. This in theory should not affect the stock price however the new lower share price will attract smaller investors.
Paypal got clumped 16% on poor outlook and results. Payment cos are in a very competitive market.
As I have pointed out regularly, earnings season can be dangerous for individual stocks. My rule of thumb here is – if price is at ATH and overbought some retracement is likey even if results are good. Outlook is key. On average it appears to me that profits should be taken before results come out. didn’t work with Google but has worked with most others particuarly the no profit IPOs etc.
Conclusion
I can’t call it. I have been flat for days. Seasonality in the bulls favour etc etc. Might do a close the gap play before US open but limited confidence.
| Resistance | Support | Long term trend | Short Term | |
| Dax | 15800 | 15600 | UP | flat |
| S&P | 4580 | 4500 | Up | flat |
| Dow | 35600 | 35k | Up | flat |
| Nasdaq | 15300 | 15k | UP | flat |
| EUR/USD | 1.1320 | 1.1280 | Down | flat |
| USD/JPY | 115. | 114.50 | Up | up |
| Gold | 1,820 | 1,780 | Flat | Flat |
MARKET MOVING ECONOMIC STATS TODAY –ISM Manufacturing was a bit lower than expected (supply chains) but reasonably strong. No market moving stats today.
https://www.investing.com/economic-calendar https://www.investing.com/earnings-calendar/
Watch your risk. Trade with stops. Colin Gregan 0851 733729