S&P 500 Technical Analysis - Daily Chart
The S&P 500 price is trading inside an ascending channel.
Yesterday, the price moved above the upper channel line and it almost touched the 200-day MA (green moving average), then it has been rejected and dropped inside the channel. This happened in response to the news that a missile hit a Polish village, a few miles away from the Ukraine border. Russia was initially blamed for this, then today it has been confirmed that instead “the incident was likely caused by a Ukrainian air defense missile fired to defend Ukrainian territory against Russian cruise missile attacks” as mentioned by Jens Stoltenberg, the secretary general of the North Atlantic Treaty Organization.
In the short term, the recent price action looks bullish, however, the price needs to break a few resistance levels: the 200-day MA (green moving average), at around level 4061, the resistance horizontal line at 4086 and then the resistance trend line of the bear market, at around 4140.
If the price can break above those resistance levels, it would be a very bullish signal that will push prices even higher and the market could flip potentially to a new bull market.
On the other hand, a rejection of those resistances will push prices lower, first to the support line at 3908 and then potentially to the bottom of the channel at around 3800.
The RSI is in Bullish mode: 61
This means that there is potentially some room for the prices to go up further before reaching the overbought level.
Market Sentiment - Fear & Greed Index
The market sentiment remains in the "Greed" mode, at 68, slightly higher than yesterday.
As mentioned, investors believe that the worst is over, inflation peaked and the FED will pivot soon.
They were just expecting good news to start buying again.
If the sentiment remains high, we can expect higher prices in the upcoming days.
In my opinion, we should be careful. I think we haven't reached the bottom of the market yet.
FedWatch Tool - FED rates probabilities
85.4% of investors are expecting the FED to increase the interest rates by 0.50% in the next meeting.
The remaining 14.6% are expecting a 0.75% rate increase.
More investors are now expecting a 0.50% interest rate increase.
No other options are considered at this stage.
The next FED meeting is on 14 December 2022.