6 Feb 2022 SPX Weekly - Inflation Again
Accuracy: 7/9 (77.77%)
Last Week
My prediction that SPX stay above 4300 turn out pretty well.
Not only that, I mentioned that fibonacci level between 50% to 61.8% would act as a resistance area which was quite spot on.
Last weeks movement was pretty much led by the mega cap companies earnings everyday. With GOOGL carrying the market up strong, followed by FB dragging a big red day. Then AMZN came in to balance the bear that FB created.
Finally, we ended Friday with an uncertain candlestick pattern.
Upcoming Week
Looking at the 30 minute candle chart, we see potential trendline on both sides. With the upside resistance side being longer term and recently tested, the upside forms a stronger resistance in my opinion.
Since we're in a tight area, we might see some consolidation and maybe some slight downwards move towards the downside support trendline before any breakout on either side can happen.
Economic Calendar
As we had most of the mega cap companies earnings announced, subsequent earnings might create some minor volatility in the market but definitely not as significant as the past 2 weeks.
So the main focus now comes back to economic events. That's why the title of this post, inflation again.
The biggest mover for next week is gonna be CPI, which is the key indicator for inflation and also the key inputs the Fed use to determine interest rate hikes and their strategy against inflation.
I would probably guess that based on the charts earlier, whether it breaks the upside trendline resistance or the downside trendline support pretty much relies on the outcome of CPI data.
Prediction
With all the above analysis, it is actually hard to make a prediction from here because it's like a flip of a coin now. Either side is dependent on that CPI data.
With the upside downtrend resistance and fibonacci 61.8% still remain as the stronger resistance and the current market being volatile in nature. I lean slightly more bearish than bullish.
So to put a safer prediction to fit into my story of consolidation then break out. I will take 50 points above the fibonacci 61.8% level as the threshold. Even if this resistance get broken, within next week it will not rally too high.
SPX to stay below 4650 by end of next week.