Looking at the S&P 500 Daily chart , the price is currently trading near a very high key area (4000 zone) inside a bearish continuation pattern, hence signaling that the bull trap we saw is near its end and that the time may have come for further downside continuation towards lower lows, not to mention that the 3084 level we are waiting for at the lower band of the channel is also the 61.8% weekly Fibonacci Retracement level.
From a fundamental perspective, although inflation in the U.S. has been slowing down for the past 2 months; however, global inflation, especially in Europe is still increasing at a very rapid pace indicating that inflation may still not have reached its peak and that further aggressive contractionary monetary policies may still be needed.
The Fed and other central banks have made it clear that they will continue raising interest rates in order to fight inflation especially the ECB as its one and only mandate is "Price Stability" close to 2%, and inflation passing double digits in Europe will definitely be a big concern not only for the ECB but to all central banks to keep up with their interest rates rise and not loosen policies as soon as they see one small decline in their CPI data.
Last but not least, Unemployment in the U.S. increased from 3.5% to 3.7% as most companies are starting to lay off workers fearing the upcoming recession. Markets have still a long way to go, thus, don't be a victim to any of these bull traps especially when trading near high key levels.
All central banks tackling inflation will sooner or later face one big dilemma, especially central banks like the Federal Reserve which is known for its dual mandates, "Price Stability" and "Employment", as going all in fighting inflation will definitely have big implications on the labor market making it interesting to monitor whether the Fed will end up pivoting like it always does or keep up increasing interest rates at the expense of its economy.
Thank you,
M.Y
From a fundamental perspective, although inflation in the U.S. has been slowing down for the past 2 months; however, global inflation, especially in Europe is still increasing at a very rapid pace indicating that inflation may still not have reached its peak and that further aggressive contractionary monetary policies may still be needed.
The Fed and other central banks have made it clear that they will continue raising interest rates in order to fight inflation especially the ECB as its one and only mandate is "Price Stability" close to 2%, and inflation passing double digits in Europe will definitely be a big concern not only for the ECB but to all central banks to keep up with their interest rates rise and not loosen policies as soon as they see one small decline in their CPI data.
Last but not least, Unemployment in the U.S. increased from 3.5% to 3.7% as most companies are starting to lay off workers fearing the upcoming recession. Markets have still a long way to go, thus, don't be a victim to any of these bull traps especially when trading near high key levels.
All central banks tackling inflation will sooner or later face one big dilemma, especially central banks like the Federal Reserve which is known for its dual mandates, "Price Stability" and "Employment", as going all in fighting inflation will definitely have big implications on the labor market making it interesting to monitor whether the Fed will end up pivoting like it always does or keep up increasing interest rates at the expense of its economy.
Thank you,
M.Y