Looks at the FOMC for Clues

As the market grapples with these uncertainties, it’s vital to remain attuned to upcoming events, particularly Wednesday’s FOMC meeting and the subsequent press conference. 

• The early hours of Monday saw the S&P 500 exhibit a subdued demeanor, with a dearth of significant economic data to inform market movements throughout the day.
• Consequently, it wouldn’t be surprising to witness a relatively quiet S&P 500, especially considering the looming cacophony later in the week.
• Notably, all eyes are on the Wednesday session, which marks the FOMC meeting and, notably, the pivotal interest rate decision.
• However, the real focus is likely to shift towards the subsequent press conference, where investors will scrutinize the Federal Reserve’s future intentions.

Presently, a significant debate revolves around whether there will be further interest rate hikes and the duration of tight monetary policy. This debate holds immense sway over investor sentiment toward the S&P 500. Additionally, the market is showing signs of possibly forming a rising wedge pattern, adding an extra layer of intrigue to the situation. The Friday session featured a massive candlestick, hinting at the possibility of a downward move to close the gap that was initiated last week.

Further bolstering the argument for the bottom of the gap as a potential target is the presence of the 50-Day Exponential Moving Average in the same vicinity. A breakdown below this critical level would undeniably mark a negative turn of events, potentially paving the way for a descent to the 4400 level or even the 200-day EMA.

In the grand scheme of things, the S&P 500 appears to be carrying a sense of weightiness. However, much of the market’s direction hinges on developments during Wednesday’s press conference featuring Jerome Powell. Notably, the Fed Funds Futures indicator currently suggests a mere 3% chance of interest rate hikes during the upcoming Wednesday meeting. However, looking ahead, the odds appear more favorable for rate hikes.

As the market grapples with these uncertainties, it’s vital to remain attuned to upcoming events, particularly Wednesday’s FOMC meeting and the subsequent press conference. These developments are poised to significantly influence market sentiment and direction. In this environment of heightened ambiguity, astute and adaptable strategies are pivotal for navigating the S&P 500’s current landscape. Keep in mind that a lot of what we see in the S&P 500, and other indices, is simply a reaction to monetary flow, and options flows. Fundamentals come in second, and then technical analysis might be in play.

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