Market Insight - Spectre of Recession and intense Inflation.

Market Insight – June 29th, 2022.

• S&P500 – Gloomy Market Outlook, Downtrend is still Intact.
• The spectre of Recession and intense Inflation.
• Could S&P 500 Test Support at 3500 level?

S&P 500

S&P 500 is down from its Jan 3 Closing peak at 4796.56 to 3821.54. It is a drop of about 20.3% and the Index is just inside the Bear Market territory. US market is yet to fall into a recession in 2022 but could the index have found support just around the recent trough it formed at 3636.87 on June 16^th. It is crucial for the investors to figure out if this was another Bear Market Rally and if there is more downside coming or if the market has found the bottom. The Index was down by 2% on Tuesday as the investors grew increasingly concerned about a potential recession caused by intense inflation and the tighter monetary policy of the Federal Reserve. Some suggest that this could be the end of the month rebalancing. However, the chart is telling a different story.

Chart Analysis

The above S&P 500 chart shows that the index is continuing to show weakness and lost its upward momentum. This is the second session in a row when investors started to push the market down by selling off intensely. This indicates the Downtrend is still intact. The market is moving in the descending parallel channel and again the prices could fall below the midline towards the key support level at 3710. Any drop below the previous low could push the prices further down quickly towards the Support Zone at 3580 a new low for the markets. As the concerns over the recessions and inflation weigh heavy on the market and apparently the corporate earnings going to drop this quarter, we may see a test of 3500 support in July.

Trade Insights

US500 – 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 towards the Resistance zone at 4050 to 4070

See Chart of the Week