SP500 made an attempt to settle above the 4600 level as traders focused on the dovish comments of Fed Chair Jerome Powell.
NASDAQ remains stuck near the 16,000 level.
Dow Jones tested new highs above the 36,200 level.
SP500 011223 4h Chart
SP500 tests new highs as traders react to Powell’s comments. Fed Chair noted that the risks of slowing the economy have become more balanced with the risks of not reaching a sufficiently restrictive level of interest rates. Powell also noted that the benchmark overnight interest rate was in the restrictive territory. Fed Chair said that Fed would move carefully, and the markets believe that the central bank will not raise rates again. Traders will continue to prepare for rate cuts in the first half of the next year. Today, traders also had a chance to take a look at ISM Manufacturing PMI report for November. The report indicated that ISM Manufacturing PMI remained unchanged at 46.7, while analysts expected that it would improve to 47.6. Numbers below 50 show contraction. The weaker-than-expected report highlighted the challenging situation in the manufacturing sector, which is an additional reason for the Fed to be more dovish.
Currently, SP500 is trying to settle above the resistance at 4575 – 4600. In case this attempt is successful, SP500 will move towards the next resistance at 4730 – 4750.
NASDAQ 011223 4h Chart
NASDAQ gains ground as market sentiment remains bullish after Powell’s remarks. However, NASDAQ remains stuck near the 16,000 level, and it looks that some traders continue to take profits near multi-month highs.
NASDAQ needs to settle above the 16,000 level to have a chance to gain additional upside momentum. In this scenario, it will head towards the next resistance at 16,400 – 16,500.
Dow Jones 011223 4h Chart
Dow Jones tests new highs as the strong rally continues. The rally is led by Salesforce stock, which continues to move higher after the recent earnings report.
From the technical point of view, Dow Jones is heading towards the resistance at 36,350 – 36,500. RSI is in the extremely overbought territory, so the risks of a pullback are high.
Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.