The Bulls Are In Charge
Michele Schneider | Aug 11, 2022 03:24AM ET
While investors are pleased by the recent tepid CPI inflation data, the S&P 500 was at significant resistance until Wednesday morning.
After a brief shift into a neutral stance, yesterday’s move higher in the SPY pushed it back into a bullish reading which suggest more strength over the short to intermediate term.
Yesterday's price action can mean only one thing, the market is bullish on mild inflation numbers.
Additionally, we're overdue for higher trading volumes and are now looking at today and Friday as follow-through days and for these spectacular daily gains to hold.
The QQQs lead the way.yesterday.
The U.S. market has seen impressive consecutive weeks of gains and yesterday the market soared even higher. The CPI figures were crucial and the moderate inflation data is playing a key role in driving markets up.
h2 Mild Inflation Expectations/h2CPI was expected to decline to 8.7% yearly in July from 9.1% in June and inflation came in at 8.5%. The U.S. Federal Reserve remains committed to tightening its policy rate to battle inflation, and better than expected CPI figures are significantly impacting how markets price in the September rate decision.
It's worth noting that investors will also pay close attention to the Core CPI figure, which excludes volatile food and energy prices. Nevertheless, a modest decline in the annual CPI is also causing investors to scale down their hawkish foercases on Fed tightening..
The overall tone of the market remains buoyant despite some concerns that have been percolating.
h2 Technical Outlook/h2As the market has rebounded strongly from earlier lows in mid-June, the SPY was at MAJOR resistance yesterday, but it looks like stocks will push higher and the SPY is above resistance closing at 419.99 yesterday.
Markets had slowed to a crawl until Wednesday morning and then exploded higher.
h2 QQQ vs. SPY/h2The tech stock market is in a significant uptrend. The overall sentiment for technology and growth is positive, but with some uncertainty, especially due to short-term treasury yields and valuations.
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The QQQs are technically in better shape than the SPY and above significant resistance compared to the S&P 500 even before the opening Wednesday morning.
Please see below the resistance that will now act potentially act as crucial support for the QQQs going forward. The QQQs were up 2.76% yesterday to 325.93.
S&P 500 (SPY) 421.08 now resistance with support at 417.90
Russell 2000 (IWM) 195.55 the resistance with support at 193.52.
Dow (DIA) 333.84 resistance and support at 329.76.
Nasdaq (QQQ) 326.47 first level of resistance and support at 322.54.
KRE (Regional Banks) 65.99 resistance, support level at 64.98.
SMH (Semiconductors) 241.30 resistance and support at 236.20.
IYT (Transportation) 246.83 resistance and support at 240.71.
IBB (Biotechnology) 133.40 resistance point and 131.65 is support.
XRT (Retail) 68.83 resistance point and with support is at 65.91.
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