Market Analysis: US Stocks Continue to Rise

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After a turbulent week filled with macroeconomic news and decisions of the central bank of the leading economies, on Monday morning futures for the E-mini S&P 500 index look bullish, being near the highs of the year.

The following factors contribute to the positive in the market:

  • Friday's data indicating a slowdown in inflation. The Core PCE Price index was 0.2% in monthly terms (expected = 0.3%, last month = 0.3%).
  • The probability of a rate hike in September according to FEDWatch is only 20%. The US economy is moving towards a soft landing, according to WSJ analysts.
  • Strong reports from a number of companies for the 2nd quarter, including Google. Also, market participants are looking forward to new reports with enthusiasm — news for AAPL, AMZN, AMD and other companies included in the S&P 500 index are scheduled this week.

However, analysts at Bank of America note that the cost of options used to hedge against falling stock prices is at an all-time low — evidence of excessive positivity in the market, which could lead to a correction.

The S&P 500 index chart shows that the price is in a vulnerable position for a pullback, as it is in the resistance area:

  • from the psychological level 4,600;
  • from the upper border of the ascending channel (shown in blue).

Support levels:

  • 4,490 level, which corresponds to approximately 50% of the rally from July lows to its high
  • median line of the ascending channel. It seems unattainable, but Bloomberg reminds us that August and September are historically the worst months for stock prices from the S&P 500 index.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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