SPX might be getting ready to revisit the channel's lower bound

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Unsurprisingly, yesterday’s FOMC meeting resulted in no change to the monetary policy. Then, during the press conference, Jerome Powell discussed the resilient economy, strong labor market, and persistent challenges to taming inflation. At some point during his speech, the stock market erased its losses and entered a green territory. However, this optimism lasted very shortly until the FED’s chairman suggested that central bankers had not reached enough confidence to start easing the monetary conditions, making a rate cut in March 2024 seem unlikely. As a result, the “higher for longer” theme is to stay with us and continue to exert pressure on the economy (plus, it is highly possible that we have not even seen the full effects of previous rate hikes on the economy due to the lag). With that said, our attention will be paid to today’s and tomorrow’s releases, particularly S&P Global Manufacturing PMI, unemployment rate, participation rate, and payrolls.

Illustration 1.01

Illustration 1.01 displays the daily graph of the SPX and simple support/resistance levels derived from peaks and troughs.

Illustration 1.02

The image above shows the daily chart of VIX, which has stopped making lower lows and has been testing the resistance at $14.49 since late December 2023.

Technical analysis gauge
Daily time frame = Bullish
Weekly time frame = Bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

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DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor or any other entity. Therefore, your own due diligence is highly advised before entering a trade.

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Note

Regional banks in the United States are falling across the board. So far, Western Alliance Bancorp fell by about 12%, Metropolitan Bank Holding Corp. by 13%, and Zions Bancorporation by 9%.