Market Insight – Euro Zone Inflation jumped to 8.6% in June!

Market Insight – 6^th July 2022.

• S&P500 – Is a Major Rebound on the Horizon?
• What are the Market Themes Indicating at?
• Euro Zone Inflation jumped to 8.6% in June!

S&P 500

After staying in the negative territory and falling as much as 2.2% the S&P 500 Edged up by 0.16% in the later hours of trading, yesterday. The Tech Heavy Index Nasdaq jumped higher by 1.75% and Down Jones was stuck in negative territory and ended the day by -0.42%. Last year the US 500 Index was up by nearly 27% and this year it is already down by 20.5% bringing the majority of stocks into correction territory.

Can the markets climb back up from here and achieve potentially another 25% gain is the question? When Stock prices are down, Treasury yields are sliding, Oil prices are retrieving, Inflation is at record highs, and the dollar exchange rate is high. During this recession period that has just started, is the Benchmark Stock Market going to find a bottom or an inflection point? It is hard to say if the economy can continue to grow in such an environment. Seems like the market and investors are all positioned for recession and any stunning recovery in the next quarter is not possible, however, a rebound could be possible by the end of the year. Non-farm Payrolls reports or NFP data critical economic data are due out this week on Friday.

Chart Analysis

The above S&P 500 chart shows that the index is moving in the descending channel. And trading above the midline of the channel heading towards the upper resistance level of the channel. The current small rallies show that the buyers are still optimistic and carrying buy the dip mentality resulting in some short-term rallies almost appearing. As the investors are resisting the economic slowdown. And other apparent negative market themes. Probably the earning season in Quarter 3 could bring investors close to reality. This will start in the next couple of weeks.  

Trade Insights – US500

The chart shows Viable Short positions below the Pivot at 3870 with the target of Key Support Level at 3710. And then to head towards the support cluster is at 3580 to 3560.

Alternatively, Long positions above the Major Pivot point at 3870 with the target to head towards the Key Resistance level at 3970. And then it towards the Resistance zone at 4050 to 4070.

Euro Zone Inflation

U.S. and Canada are already struggling with record-high inflation and increasing interest rates to manage inflation by the respective central banks are certainly going to slow the economic engines down. The Euro Zone Inflation figures are escalating at a much faster pace compared to the North American economies. The EU Inflation data for June 2022 jumped to 8.6% compared to 8.1% in Man and 7.4% in April 2022. As the EU has banned Oil imports from Russia, the higher energy cost, and Ukraine- Russia conflict has become the main driver of Europe’s Inflation Data. Interestingly, compared to the US and Canada Europe is yet to take its first steps to combat inflation and a rate hike is likely in late July.

See Chart of the Week