Market Insight – S&P 500 breaks through the Resistance Level

Market Insight – 28^th July 2022

• S&P500 – S&P 500 breaks through the Resistance Level
• Federal Reserve raised Interest Rate by 0.75% in July.

S&P 500

The S&P 500 Index jumped up higher yesterday as the Federal Reserve raised its Funds Rate by 75bps to 2.5% during its July 27^th Meeting. It is the fourth consecutive hike, and this has now pushed the borrowing cost to the highest level since 2019. Chairman Powell outlined that the next decision will be based on data. And he could not predict the monetary policy range for the next year. The interest rate hike is an effort to tame down the inflation that has been running at a four-decade high. The US 500 index jumped higher ignoring the rate hike. Because Powell also indicated the hikes will eventually slow. The US bond yields are dropping too, from the recent peak of 3.5% to 2.77% today. The effect of the rate increase on the inflation numbers is going to be the true test. And it would keep the Feds on the Rate hike path if the inflation numbers do not recede by the end of September.

The S&P 500 index has been climbing higher since July 14^th and yesterday broke out to a six-week high to 4023 points a jump of about 2.62%, The Nasdaq went higher to 12032 points or 4.06% and the Dow Jones was up to 32197.59 or 1.37%.

Chart Analysis

The US500 chart shows that the index rebounded yesterday by 102.56 points or about 2.62% just while trading above the Major Pivot on Chart 3920. Yesterday, in our chart of the day we covered the Index and highlighted a possible Long Trade in our trade insights if the prices continue to stay at about 4090 Pivot. The Index is now sitting just above the top limit of the ascending Bullish Channel. The prices could test the 4090 Key resistance level and that would bring the market to a major confluence point that is also the Key Resistance Level on the chart.

• Resistance Zone: 4230 to 4260
• Key Resistance: 4090
• Major Pivot Point: 3920
• Key Support Level: 3815
• Support Zone: 3720 to 3690
• 200 Day SMA – Green Line
• CBOE VIX – Volatility Index @ 23.24 -1.45 (-5.87%)

Trade Insights – US500

The chart shows Viable Long Positions above the Major Pivot point at 3920, with the first target of the Key Resistance level at 4090 and then to head towards the Resistance Zone between 4230 to 4260.

Alternatively, Short positions below the Major Pivot point at 3920 with the target to head towards the Key Support Level at 3815 and then towards the Support Zone at 3720 to 3690.