SPX Daily TA Neutral Bullish

27 lug 2022

SPX Daily neutral with a bullish bias. Recommended ratio: 55% SPX, 45% Cash. *BULL TRAP WATCH. META missed on both earnings and revenue estimates in addition to seeing their first drop in revenue growth; they predict that this trend will continue in Q3 and perhaps the rest of the year. Fed announced a 75bps hike today and Chairman JPow iterated that we aren't in a recession because the labor market continues to be resilient (stagflation), assuring investors that a soft landing is still not out of reach. Interestingly, he also mentioned that "another unusually large rate hike could be appropriate at the next meeting", "path to a soft landing is narrowing", "likely full effects of rate hikes have not been felt [by the economy] yet", and that inflation could get worse going into year end. Somehow, investors are rejoicing as if a bottom is in; but if you look at what happened when the last FOMC statement was released, SPX rallied 2% from $3762 to $3841 to close 06/15 and then fell 5% from $3841 to $3642 to start the next session (06/16). The TA this time around looks a bit different but it's something to be mindful of going in to tomorrow. Key dates remaining this week: 1st Q2 GDP estimate at 830am EST tomorrow (07/28), AAPL and AMZN earnings after-hours tomorrow (07/28), PCE Index report at 830am EST (07/29) and University of Michigan Consumer Sentiment Index (07/29). If the first GDP estimate comes in at -1.2% (current GDPNow estimate) or less, it will likely add bullishness to hopes of a 'mild recession' or no 'recession' at all. If PCE numbers (the Fed's preferred gauge of inflation) show that they are declining somehow, the Fed will likely interpret that as inflation starting to wind down and will look to raise FFR by 50bps in September (which money markets would likely perceive as bullish). It's still too premature to call for a bottom but if Price is able to close above $3938 for the rest of the week, there is a good chance that it tests the upper trendline of the descending channel from August 2021 at ~$4300 riding into September.* Price is currently breaking out above $3938 minor resistance after bouncing from a very critical support juncture in response to the FOMC statement today. Volume remains Moderate (high) and has been alternating between buyer and seller dominance over the past four sessions. Parabolic SAR flips bearish at $3809, this margin is mildly bearish. RSI is currently trending up at 60 (3-month high) with no signs of peak formation after bouncing from 53 support, the next resistance is at 68. Stochastic bounced off 76 support and is currently trending up at 80, if it can break above 81 it would be a bullish crossover. MACD remains bullish and is currently trending up at 20 after breaking above 10.73 support, the next resistance is at 33. ADX is completing a trough and is currently trending up slightly at 16 as Price is pushing higher, this is mildly bullish. If Price is able to close above $3938 for one more session then the next likely target is a retest of $4175 resistance. However, if Price breaks back down here it will likely retest $3938 minor support before potentially heading lower. Mental Stop Loss: (one close below) $3915.