17 Jul 2022 SPX Weekly - Inflation Peak

Accuracy: 24/29 (82.76%)

No Prediction

Last Week

Did not make any prediction because of a coin flip due to CPI data. So it appeared to be an interesting outcome. CPI (inflation) did worsen but the market is reacting interestingly different.

So the week started grinding lower in anticipation of CPI data. The moment CPI data was announced in the premarket, SPX tanked almost 100 points. But immediately after market open, SPX recovered almost back to where it started.

Not only we had a pinbar on Thursday, we gapped up and closed a solid bullish candle on the daily chart.

Note that we're still on the downtrend since Jan 2022, as seen on the regression trend line and the resistance line I've drawn. The current Friday closing price is pretty much near the resistance trend line.

Next Week

We should expect continuation of momentum from this Friday bullish close.

The immediate support and resistance areas from here are 3750 below and 3900 above. Followed by 3636 support as the lowest point so far in this bear market and 4075 which had several points tested previously.

With the bullish momentum, we should hope to see SPX testing the 3900 resistance next week and see if it breaks upwards. It's also the nearer area to be tested. So I kinda lean bullish from the technical perspective.

Economic Calendar

On the economic calendar, after a big week with CPI and all the FOMC/Fed stirring the market. Next week seems to be pretty calm in terms of economic events.

Which to me no news means good news, unless there're unexpected news that suddenly came up which we can't really predict anyway. So on this, we're leaning bullish as well.

Earnings

Here we go again, it's the start of earning season. Last week we had a few banks announced their earnings together with CPI data release and the market is factoring in these as well.

I had a watchlist of all the major banks on my TradingView and this is how it looks like after Friday. The numbers are reflecting Friday change.

Among them, Citibank (C) and Wells Fargo (WFC) had their earnings announced. That's probably why they had bigger change % compared to the rest. BAC is having some anticipation move as its earnings is coming before Monday market open.

Some additional info here is, (C) had a double beat in its earning while (WFC) had a double miss. Despite that both reacted pretty bullish.

With this head start of the earnings, next week more companies are announcing their earnings too. Some biggest mover includes TSLA, NFLX and several major banks. Together with many pretty large cap companies that will have some impact as well.

Prediction

I still stay pretty bullish overall with the momentum last week and the lack of any critical economic event next week. The only concern would be from the earnings.

I'll stay with the belief that if inflation really peaked, more good news that keeps the market bullish will slowly surface. So with that I'll put a bullish prediction for next week on the nearest support.

SPX above 3750

Invest

Can't emphasize enough of this, it's really getting more and more attractive from the investment standpoint to start or continue to dollar cost average into the strong companies or even just SPY. Spread your cash into few months to gradually bank in your investment monthly. I'm still doing that monthly now and staying discipline to keep it consistent. This will go a long way into many years ahead.