S&P 500 rises ahead of Fed Powell’s testimony. Is this another dead cat bounce? -by Ecork

US stocks overview:

  • The S&P 500 made a solid recovery after last week’s tough sell-off
  • Despite the positive sentiment on Wall Street, US stocks are still tilting to the downside, including the top stock benchmarks
  • Market attention will turn to Powell’s testimony before Congress on Wednesday and Thursday

Most Read: Dow Jones, S&P 500 and Nasdaq 100 Indices for the Next Week – Not Looking Good

After losing nearly 6% last week and posting its worst weekly performance since 2020, the S&P 500 rose on Tuesday, helped by the improve morale And perhaps the end of a quarter of rebalancing activity. In early afternoon trade, the benchmark stock index rose 2.4% to 3,762, although it was up 2.85% in the morning.

Buyers try to fall back Take advantage of recent stock weakness and severe oversold conditions To pick up cheap, battered stocks ahead of a potential rebound in the hope that the worst may be over for now, at least until the next batch if critical economic data and corporate earnings roll around.

Although Wall Street’s risk-taking mood is welcome, The S&P 500 is still trapped in a bear market It maintains a negative bias based on technical signals as well as fundamentals. From a historical point of view, the S&P 500 has endured 11 bear markets since 1950. After this condition was first met, the index typically fell for an additional 1.5 months on average before hitting a cycle low and starting to make a recovery.

Focusing on Tuesday’s price action, it is important to stress that there will always be Brief bounces and face-tearing gatherings In any bear market before the next bottom segment develops. With that in mind, traders should Practice carefully To avoid getting on the wrong side of the trade again, especially considering there are many false signals and a dead cat bounce in 2022.

Looking ahead, there are no major economic releases in the US calendar for the next two days, but Federal Reserve Chairman Powell He is expected to appear before Congress on Wednesday and Thursday to present the bank’s report Semi-annual Monetary Policy Report. Traders should carefully analyze Powell’s comments for evidence of the ferocity of the tightening cycle in the face of High inflation for four decadeson the basis that any optimistic statements will be bearish for the shares.

S&P 500 Technical Analysis

The S&P 500 fell violently last week and hit a new low in 2022, but decisively failed to break through the 3700-3665 cluster support. If this area holds in the near term, the rebound may have legs, but to be confident that the worst is over and that This is not another killer bounce, prices should rise above the resistance at 3810 and regain the psychological level of 4000. On the other hand, if sellers regain control of the market and push the index below 3700/3665, all bets are off. Under this scenario, negative pressure could accelerate, paving the way for a move towards the 3500 area, a key floor created by the 50% Fibonacci retracement of the 2020/2022 rally.

S&P 500 تقني Technical Chart

S&P 500 daily chart created using TradingView

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