S&P 500 Price Consolidates ahead of Earnings Season

On April 4, we wrote that the S&P 500 is showing signs of weakness around the 5,250 level. How is the situation on the stock market developing by today, which is the start of the reporting season for the first quarter?

The S&P 500 fell sharply on Wednesday amid higher-than-expected inflation data.

But the S&P 500 rose yesterday after data showed producer prices rose only slightly in March.

According to Forexfactory:

→ Producer Price Index (PPI) in monthly terms: actual = 0.2%, forecast = 0.3%, a month ago = 0.6%;

→ Core PPI in monthly terms: actual = 0.2%, forecast = 0.2%, a month ago = 0.3%.

At the same time, a bottom-up reversal has formed on the S&P 500 chart, which:

→ reflects changing moods. Since the publication of the PPI has allayed some concerns about persistently high price pressures in the economy;

→ corrected the location of the lower border of the ascending channel (shown in blue), confirming its action as support.

After news-filled days related to inflation and expectations of a change in Fed monetary policy, investors' focus turns to earnings season. Today after the close of the trading session about JPMorgan Chase & Co

(JPM), Citigroup Inc (C), and Wells Fargo & Co (WFC).

According to technical analysis of the S&P-500 chart:

→ the median line of the ascending channel works as resistance, “not letting” the price into the upper half of the channel. This strengthens the mentioned resistance level of 5250.

→ if the bulls fail to build on Thursday’s momentum, the price may enter consolidation between the levels of 5140 and 5250. The closest test for the sustainability of demand is the trend line (shown in black).

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