The S&P 500 falls following China's protests

China's growing protests are sending oil and stocks down

It looks like in China there is no rest for the protests against COVID-19 lockdowns leaving investors in a feeling of uncertainty.

That has led the stock market as well as the oil to tumble.

According to the actual level of the Long-dated Treasury yields, which is below the Fed’s overnight benchmark range, traders believe that we are going to see a recession starting next year.

This week there are important data to be released such as the November US jobs number including the unemployment rate, but all eyes are on Powell who is going to speak about the Fed monetary policy and its effectiveness.

S&P 500 Technical Analysis - Daily Chart


The S&P 500 price has been rejected at the 200-day MA (green moving average).

We have been watching closely at this key technical level since it can signal a bull or a bear market.

The last time the price touched the 200-day MA was in mid-August and has been declining ever since.

Therefore, this rejection is a bearish signal and possibly a confirmation that the bearish trend will continue.

The potential support lines, that the bulls will have to defend are the 3900 level which is in line with the horizontal support and also the 21-day MA (blue moving average) and afterwards the 3800 level which corresponds to the 50-day MA (red moving average) and the bottom of the rising channel.

If the price can break above the 200-day MA, the next resistance levels are at 4086 and 4100.

The RSI moved lower to 58, but it's still indicating a Bullish trend.

Therefore we need to wait to understand if this is just a correction in this new uptrend and prices will be able to break the 200-day MA the next time, or if this is a confirmation that the overall trend is still bearish.

For this reason, we still need to be cautious right now, as the price has to break the main resistance levels above 4100 before turning to a bullish trend.

Fear & Greed Index

The market sentiment remains unchanged in "Greed" level at 64 out of 100.FedWatch Tool - FED rates probabilities.


 
69.9% of investors are expecting the FED to increase the interest rates by 0.50% in the next meeting.

The remaining 30.1% are expecting a 0.75% rate increase.

The data show us that the number of investors expecting an increase of 0.75% is getting higher.

No other options are considered at this stage.

The next FED meeting is on 14 December 2022.