The S&P 500 index futures are crawling back as investors buy last week’s dip. The SPX index is trading at $3,674, close to its lowest level since January 2021. It has fallen by more than 20% from its highest point this year, meaning it is in a bear market. The closely watched SPY ETF that tracks the S&P 500 index has also retreated.
American shares have been in a strong sell-off as investors react to the hawkish interest rate decision by the Federal Reserve and worries of a recession. Odds of a recession are rising, with key data pointing to more weakness.
For example, housing data published last week showed that the country’s building permits and housing starts declined sharply in May as mortgage rates soared. Historically, problems in the housing market are usually seen in key numbers like housing starts, pending and new home sales, and existing sales. Therefore, one of the biggest S&P 500 catalysts will be results by KB Home, one of the biggest housebuilders in the US.
The other key S&P 500 companies that will publish their results are Accenture, FedEx, CarMax, Carnival, FactSet, Smith & Wesson, and Blackberry, among others. FedEx is an important company because it provides a barometer for the global economy’s health. The company does well when the economy is booming,
Tesla will be another key company to watch after its cars were banned from a Chinese party town. Two workers sued it by claiming that it fired them without warning.
Still, there is a likelihood that the recovery of the S&P 500 and the SPY fund are dead cat bounce since risks are still there. The main risks are thinning margins and the extremely hawkish Federal Reserve. On the other hand, potential catalysts are that key commodity prices like iron ore and copper have retreated slightly.
The daily chart shows that the S&P 500 index has been in a strong bearish trend in the past few days. The index made a break and retest pattern by retesting the important resistance at $4,115. This pattern is usually a bearish sign, which explains why it has recently pulled back. It remains below the 25-day and 50-day moving averages while the MACD is below the neutral point.
Therefore, the S&P 500 index will likely continue falling, with the next key support level being at $3,500. A move above the key resistance level at $3,760 will invalidate the bearish view.
This post was last modified on %s = human-readable time difference 08:25