Correction Risks for the USA500 in a Volatile Economic Context
Although US markets will remain closed for the Good Friday holiday, key economic data is expected this afternoon that could influence the indices after Spring Break, when many Americans take the opportunity to travel to Mexican destinations such as Cancun, Acapulco or the ski slopes in Canada.
Data on vehicle inventories, trade balance, wholesale inventories and the consumer price spending index, along with Powell's appearance, are expected to have a significant impact on the main index. We are likely to see moderate or even declining numbers, reflecting a drop or containment in borrowing capacity and raising expectations for Jerome Powell's speech. Although Thursday's data showed robust U.S. economic growth in the last quarter of last year, driven by consumer spending, and a solid unemployment rate, some indicators suggest a trend change in consumer habits, reporting that not as much fast food is being consumed, so there could be a trend change or else not all the information is being reflected in these statistics about the average consumer.
The Fed's preferred gauge is the personal consumption expenditures (PCE) price index and this may provide clues as to what may happen in the June calendar and the magnitude of rate cuts that may be implemented. Yesterday at the end of the session Christopher Waller, stated that the inflation data was disappointing and we need to continue to refrain from cutting the short-term interest target, without ruling out further changes. CME's FedWatch tool gives us a 64% chance of a cut of at least 25 basis points (bps) in June, nothing new under the sun. The Fed's inflation carrot still seems to be working to continue to hold rates higher.
Meanwhile, the S&P500 (Ticker ActivTrades: USA500) closed the week in positive territory, posting its best quarter in five years closing at 5,254.35 points. The Dow Jones is 1% away from surpassing 40,000 points for the first time being at yesterday's closing time at 39,807.37 points, while the Nasdaq Composite(Ticker AT: USATEC) experienced a slight decline losing -0.12% to 16,379.46 points. The communication, energy and technology sectors have led the market, while real estate has shown a decline. The three major indices have had a good price climb, focusing on the main index, the S&P500 has lived +20.98% since January and a trading volume 21.21 Million. S&P500 has recorded 91 new 52-week highs with no new lows. While Nasdaq has recorded 275 new highs and 52 new lows.
From a technical point of view, the S&P500 has room to remain bullish, but the RSI suggests it could be overbought at 68.96% with a 200-day overbought average of 60.50%, indicating the possibility of corrections in the next quarter. However, much will depend on how the political landscape evolves in an election year, with the index facing the possibility of reaching new highs in the 6,000-point zone, or looking for lower levels in the 4,622-point zone.
Ion Jauregui - AT Analyst
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The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
Data on vehicle inventories, trade balance, wholesale inventories and the consumer price spending index, along with Powell's appearance, are expected to have a significant impact on the main index. We are likely to see moderate or even declining numbers, reflecting a drop or containment in borrowing capacity and raising expectations for Jerome Powell's speech. Although Thursday's data showed robust U.S. economic growth in the last quarter of last year, driven by consumer spending, and a solid unemployment rate, some indicators suggest a trend change in consumer habits, reporting that not as much fast food is being consumed, so there could be a trend change or else not all the information is being reflected in these statistics about the average consumer.
The Fed's preferred gauge is the personal consumption expenditures (PCE) price index and this may provide clues as to what may happen in the June calendar and the magnitude of rate cuts that may be implemented. Yesterday at the end of the session Christopher Waller, stated that the inflation data was disappointing and we need to continue to refrain from cutting the short-term interest target, without ruling out further changes. CME's FedWatch tool gives us a 64% chance of a cut of at least 25 basis points (bps) in June, nothing new under the sun. The Fed's inflation carrot still seems to be working to continue to hold rates higher.
Meanwhile, the S&P500 (Ticker ActivTrades: USA500) closed the week in positive territory, posting its best quarter in five years closing at 5,254.35 points. The Dow Jones is 1% away from surpassing 40,000 points for the first time being at yesterday's closing time at 39,807.37 points, while the Nasdaq Composite(Ticker AT: USATEC) experienced a slight decline losing -0.12% to 16,379.46 points. The communication, energy and technology sectors have led the market, while real estate has shown a decline. The three major indices have had a good price climb, focusing on the main index, the S&P500 has lived +20.98% since January and a trading volume 21.21 Million. S&P500 has recorded 91 new 52-week highs with no new lows. While Nasdaq has recorded 275 new highs and 52 new lows.
From a technical point of view, the S&P500 has room to remain bullish, but the RSI suggests it could be overbought at 68.96% with a 200-day overbought average of 60.50%, indicating the possibility of corrections in the next quarter. However, much will depend on how the political landscape evolves in an election year, with the index facing the possibility of reaching new highs in the 6,000-point zone, or looking for lower levels in the 4,622-point zone.
Ion Jauregui - AT Analyst
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.