SP500 ahead of FED
After it touched the historical higher, SP500 is easing ahead of the FOMC meeting. Market participants are waiting for the Federal Reserve meeting to learn about their monetary policy and economic recovery outlook.
On the first day of the week, while Nasdaq gains more than 0.4%, dow jones is lower by 0.24%, and SP500 eased 0.67%.
The main reason that last Friday, US stock and Especially SP500 could gain momentum was aftermarket confidence about Inflation and FED`s commitment to its promises to hold the policies as long as needed and the labor market gets back on its own feet. Most analysts believe that FED will not start easing the Bond purchasing amount any time before the Jackson hole symposium 2021 in late August. And even that time, they will begin to discuss that.
However, at the moment, the only issue is Inflation. It is precisely here that many investors can not buy FED comments on Inflation. The majority of FED members believe that higher Inflation is transitory, while market evidence says something else.
Max Gokhman, head of the asset allocation at Pacific Life Fund Advisors in Newport Beach, California: "As we get closer to the end of the summer, they (the Fed) are going to want to start talking about taper and telegraphing when they`re going to raise rates, and that`s where we do have a potential for a misstep," "Tech is performing a little bit stronger than value, but I don`t think that is a permanent trend. The value will remain a dominant sector."
From tomorrow`s FOMC meeting, some market participants are waiting to hear a mixed comment that makes them worry about the following FED decisions. We are waiting to see disagreements between the members, especially about tapering the bond purchase plan. This disagreement brings doubt to the market, and these doubts can put pressure on stock markets.
SP500 technical analysis - H1
The current level at 4,235 (S1), where the Parabolic SAR started for probably recovery signal; however, it can be the new start of another downtrend round from here. Since the price moves under the OBV trend line, MACD histograms move under 0-line, and RSI moves at 35, other indicators primarily supporting more downward. Trading under S1 will put the second and third supports at 4,224 and 4,217 in the spotlight.
