16 Oct 2022 SPX Weekly - Weird Reaction
Accuracy: 35/41 (85.37%)
SPX below 3800 - Correct
Last Week
SPX played out pretty much how I expected with first few days anticipating and ranging while waiting for the big CPI numbers.
Whats even more interesting is the moment CPI numbers are released SPX tanked over 100 points but when market opened, it reversed so strongly and closed even higher than before the CPI numbers.
This is such a weird reaction, everyone is definitely gonna be asking what exactly happened? My answer to this will be market irrationale as it always is in the short term.
While from the economics perspective, it seems like the market is getting used to this inflation and CPI numbers. Market seems to get numb on the fear effect of all these and also possibly seeing inflation peaking as some of the underlying data in the detail CPI numbers are kind of lagging.
Then on Friday we actually pulled back half way, seems to me like filling some gaps created on the strong move the day before.
Next Week
Lets draw some support and resistance to see where we can expect SPx to move. It seems like we have a range between 3560 and 3720.
With a bullish engulfing reaction from CPI, I have to say I have much more bullish bias than bearish. At least from a technical perspective.
Economic Calendar
The economic calendar looks pretty quiet next week, especially when comparing relatively to what we had last week. Few FOMC speakers and jobless claim as usual, I don't think there would be strong moves triggered by all these.
Whats more triggering is gonna be non other than...
Earning Season
First big earning week of the earning season will once again be the catalyst to move the market.
Highlighted yellow are all the financials related companies which I think will be one of the bigger factor in this inflation topic.
Red are some of the biggest tech related companies, where there will be a lot more hype and volume. Especially TSLA and SNAP, which have always caused big moves to SPX.
Green are some of the bigger market cap defensive companies, probably smaller impact unless if there are some huge surprises. So do still keep a look out on them.
Prediction
Putting up a different approach of prediction going against the downtrend, I bet on SPX not making a new low next week. Might be a wrong bias but just felt like going with this fully aware the earnings may potentially cause further down moves.
SPX above 3489