Technical Analysis

S&P500 (SPX) Price Analysis – March 6, 2023

By LonghornFX Technical Analysis
Mar 6, 20233 min

Daily Price Outlook

The S&P500 (SPX) is currently trading at $4,045.64, representing an increase of 1.61% in the past 24 hours. The surge in the S&P 500 was due to the decrease in US Treasury rates and investors' acceptance of the increasing possibility that the Federal Reserve will maintain its tight monetary policy until the end of the year.

Fed rate hikes speculations

The previous week's US statistics sparked concerns about the hawkish stance of the Federal Reserve (Fed). However, the Fed's semi-annual Monetary Policy Report released on Friday stated explicitly that the Fed funds rate target must continue to increase, with a commitment to bringing inflation back to 2%.

Investors will be watching the US employment data for February on Friday and Jerome Powell's testimony before Congress for any updates on the direction of interest rates.

Powell is scheduled to speak before Congress and provide the central bank's semi-annual report on monetary policy, speaking before the Senate on Tuesday and the House of Representatives on Wednesday.

Market participants will closely watch his comments for indications of whether a higher rate rise is being considered this month after recent US statistics indicated continuing inflation.

Traders expect the Fed to raise interest rates by another 25 basis points this month, with market pricing now indicating a higher probability of a rise than in the past. The dollar held steady on Monday at around 104.43 after facing severe losses the previous week. The US 10-Year Bond Yield fell by 0.68% to 3.936.

Corporate earning

Due to high inflation and the Federal Reserve's interest rate hikes, corporate America has experienced some sharp and disappointing earnings results. Almost 99% of S&P 500 companies have already released their Q4 earnings, and the results have been particularly disappointing for the tech sector.

IT companies had a dismal performance in the last quarter, with Apple reporting an unusual earnings miss, while Intel and Alphabet, the parent company of Google, underperformed forecasted earnings.

However, not all was negative, as energy firms generated record profits for another quarter, with Chevron, ConocoPhillips, Exxon, and Shell recording their most profitable years ever. Tesla also announced record revenue growth and exceeded profit expectations. Target and Walmart also outperformed forecasts as US consumers continued to spend.

On average, S&P 500 index business earnings last quarter were only slightly above analyst expectations by around 1.3%.

 S&P500 Price Chart - Source: Tradingview

S&P500 Intraday Technical Levels

Support      Resistance

3943            4005

3904            4029

3880            4068

Pivot Point: 3967

S&P500 – Technical Outlook

From a technical perspective, the S&P 500 (SPX) has rebounded from the support zone at the $3,930 level. The appearance of the "three white soldiers" pattern in the 4-hour timeframe increases the possibility of a bullish rebound.

On the upside, the SPX's immediate resistance level is at $4,095, supported by a 61.8% Fibonacci correction level. A bullish breakout of the $4,035 level may lead to further gains toward the $4,200 mark.

However, in the event of a breakdown below the support level of $3,930, the SPX may drop toward the next support level at $3,880.



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