S&P500, USD Talking Points
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Futures for Beginners
FOMC Delivers an Unfavorable Message for Stocks – SPX Reacts
S&P 500 Futures have fallen back to the 4000 psychological level as Fed Chair Jerome Powell quashed hoped of rate cuts next year.
With interest rates and economic data driving another week of price action, another 0.5% rate hike from the ECB (European Central Bank), BoE (Bank of England) and Fed continues to weigh on lower yielding assets.
FX traders can monitor central bank announcements via thecentral bank calendar
Although the moves are in-line with expectations, the shift in sentiment arose after the FOMC meeting confirmed that higher rates would likely persist for the duration of 2023.
As investors weighed the hawkish rhetoric against the projected economic outlook, equities turned bearish, dragging SPX lower.
SPX (S&P 500) Technical Analysis
After breaking trendline resistance earlier this week, S&P 500 futures posted a fresh three-month high before peaking at 4180. With a rejection of this zone and a swift retaliation from sellers resulting in an extended upper wick of the daily candle, a hold below 4050 has supported the bearish move.
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While the 200-day MA (moving average) forms an additional layer of resistance at prior support at 4033, a break of 4000 could cause the US 500 to experience further declines.
SPX (S&P 500) Daily Chart
Chart prepared byTammy Da Costausing TradingView
From the weekly chart below, the gravestone doji that is in the process of forming further highlights the strength of current resistance. As the narrow body holds slightly above 3956, a drop below 3912 and a break of 3880 could drive price action back towards the 61.8% retracement of the 2020 – 2022 move at 3802.
SPX Weekly Chart
Chart prepared byTammy Da Costausing TradingView
US 500 Sentiment
US 500:Retail trader data shows 51.80% of traders are net-long with the ratio of traders long to short at 1.07 to 1.The number of traders net-long is 6.60% higher than yesterday and 5.74% lower from last week, while the number of traders net-short is 0.19% lower than yesterday and 1.23% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggesting US 500 prices may continue to fall.
| Change in | Longs | Shorts | OI |
| Daily | 4% | 2% | 3% |
| Weekly | -7% | 0% | -3% |