Strong retail sales data
Major U.S. indexes dropped yesterday following the retail sales report.
The data showed that retail sales were up strongly in October, above expectations.
This is a sign that the U.S. economy is strong, therefore the Federal Reserve will likely continue to increase the interest rates to reduce the high inflation.
Mary Daly, San Francisco Fed President, said that a pause in rate hikes was “off the table”.
Investors are also looking at the Treasury yield curve, which is currently inverted, and this is historically a signal that the economy might fall into a recession.
S&P 500 Technical Analysis - Daily Chart
The S&P 500 price is still trading inside an ascending channel.
Following the news regarding the retail sales data and the possible Fed decision about interest rates, the S&P 500 index price dropped to 3900 and is currently testing the support line at the same level.
There are two possible scenarios:
if the support at 3900 can hold the price, we can expect a price jump to the range between 4050 and 4100, respectively the 200-day MA (green moving average) and the trend line of the bear market
if the support will not be strong enough to hold the price we can expect a drop to around 3800, the 50-day MA (red moving average).
In the short term, the recent price action looks bullish, however, the price is still in a bear market.
If the price can break above 200-day MA, it would be a very bullish signal that will push prices even higher and the market could flip potentially to a bull market.
The RSI dropped to 55 remaining in Bullish mode.
Market Sentiment - Fear & Greed Index
The market sentiment remains in the "Greed" mode, at 59, down from yesterday, following the recent drop.
FedWatch Tool - FED rates probabilities
80.6% of investors are expecting the FED to increase the interest rates by 0.50% in the next meeting.
The remaining 19.4% are expecting a 0.75% rate increase.
More investors are now expecting a 0.75% interest rate increase.
No other options are considered at this stage.
The next FED meeting is on 14 December 2022.
Major U.S. indexes dropped yesterday following the retail sales report.
The data showed that retail sales were up strongly in October, above expectations.
This is a sign that the U.S. economy is strong, therefore the Federal Reserve will likely continue to increase the interest rates to reduce the high inflation.
Mary Daly, San Francisco Fed President, said that a pause in rate hikes was “off the table”.
Investors are also looking at the Treasury yield curve, which is currently inverted, and this is historically a signal that the economy might fall into a recession.
S&P 500 Technical Analysis - Daily Chart
The S&P 500 price is still trading inside an ascending channel.
Following the news regarding the retail sales data and the possible Fed decision about interest rates, the S&P 500 index price dropped to 3900 and is currently testing the support line at the same level.
There are two possible scenarios:
if the support at 3900 can hold the price, we can expect a price jump to the range between 4050 and 4100, respectively the 200-day MA (green moving average) and the trend line of the bear market
if the support will not be strong enough to hold the price we can expect a drop to around 3800, the 50-day MA (red moving average).
In the short term, the recent price action looks bullish, however, the price is still in a bear market.
If the price can break above 200-day MA, it would be a very bullish signal that will push prices even higher and the market could flip potentially to a bull market.
The RSI dropped to 55 remaining in Bullish mode.
Market Sentiment - Fear & Greed Index
The market sentiment remains in the "Greed" mode, at 59, down from yesterday, following the recent drop.
FedWatch Tool - FED rates probabilities
80.6% of investors are expecting the FED to increase the interest rates by 0.50% in the next meeting.
The remaining 19.4% are expecting a 0.75% rate increase.
More investors are now expecting a 0.75% interest rate increase.
No other options are considered at this stage.
The next FED meeting is on 14 December 2022.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.