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.