Stocks rallied on Tuesday amidst a cooler than expected read on inflationary pressures in the economy, providing investors with the perception that the Fed’s work combating the cost of living crisis is done. The S&P 500 Index jumped by 1.91%, moving higher from recently broken resistance at its 50-day moving average and opening a gap at 4425. The gap hurdle creates a new level of support below the benchmark as levels of resistance become fewer the higher that prices climb. The next hurdles on the upside to monitor are the September high around 4540 and then the July peak around 4600, levels that are within arm’s reach following Tuesday gain. This is clearly a market that is showing greater respect to levels of support than levels of resistance, which is characteristic of a bull market trend. Prices are closing in on overbought territory with the Relative Strength Index (RSI) knocking on the door of 70, but the market is not providing any favors to get in at more desirable levels as short-term seasonal tendencies suggest should occur through the middle of November. Normally, start of November strength typically gives way to digestion of the gains through the middle of the month, followed by the return of strength around the US Thanksgiving holiday weeks. At this point, portfolio managers seem to be racing to get in at any price after become overly bearish coming into this seasonally strong month, overall, for equity market performance. All that we need to be concerned of in our intermediate-term/seasonal perspective is that horizontal support in the range of 4100 to 4200 holds and that has been our bet into year-end. A significant improvement of risk sentiment keeps the upside bias into year-end firmly intact and starts to alleviate our concern, for now, pertaining to the sustainability of the advance into year-end.
equityclock.com
It looks like all the other war rallies: 1991, 2001, 2003. Market rallied as soon as the ground invasion started. |
