The S&P 500 Staggers Toward More Fed News

The S&P 500 has bounced from its January 24 low as investors focused on corporate earnings. But now it’s staggering as attention shifts back toward the Federal Reserve and inflation.

First, consider the potential hanging man candle on February 2. Like January, was the high made early in the month?

Second, that potential reversal pattern occurred at both the January 10 low and the 100-day simple moving average. Both previously represented support. Have they become new resistance?

Third you have the bearish gap on February 3, which prices have remained firmly below.

Fourth, yesterday was a bearish inside day.

Fifth, the 8- and 21-day exponential moving averages (EMA) remain in bearish alignment. Also notice how the index closed below the 8-day EMA yesterday.

Finally, SPX has remained above its 200-day SMA in the last three sessions. A break below that line may trigger more selling.

Returning to the calendar, most of the big names have already reported earnings. Two Fed voting members speak tomorrow (Michelle Bowman and Loretta Mester). January’s consumer price index is on Thursday morning. Minutes from the January 25-26 meeting follow next week (February 16). Those events may shift sentiment back toward the central bank’s hawkish monetary policy.

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