S&P 500, Nasdaq 100, Federal Reserve, Russia, Ukraine – Talking Points
- S&P 500 penned in by resistance around 4,360
- Nasdaq 100 continues to fail at key 14,000 level
- Markets flat as traders digest recent central bank moves
Following yesterday’s Federal Reserve rate hike, markets are trading flat to slightly lower as market participants ponder the path of central bank tightening. Thursday’s consolidation in price action may simply reflect a cool-down following the melt up over the last few sessions, after the S&P 500 bounced sharply off of trendline support. With such a tight trading range, S&P futures may be coiling ahead of the next leg higher.
As of the time of writing, S&P 500 futures (ES) continue to be penned in by stiff resistance at 4,360. ES has surged over the last few sessions, with the dip below support at 4,160 being bought up swiftly. Despite the rally, headwinds remain for the index. Oil has rebounded back above $100 and little progress has been made during peace talks between Russia and Ukraine. The Russian war in Ukraine has greatly impacted the macro landscape, causing global growth forecasts to receive significant haircuts over the last couple of weeks. So long that this prolonged war weighs on sentiment and growth prospects, upside for risk-assets may remain capped.
S&P 500 Futures (ES) 1 Hour Chart
Chart created with TradingView
Market participants are now stuck with the task of digesting what was said and what wasn’t said in yesterday’s FOMC press conference. Fed Chair Jerome Powell showed the Fed is ready to tackle 40-year high inflation, with every meeting now a “live meeting” and 50 basis point hikes firmly a possibility in the future. Markets were keen to see plans for balance sheet reduction, as traders look for clues on how the Fed will wind down its nearly $9 trillion balance sheet. Chair Powell indicated that a plan may be announced at an upcoming meeting.
Nasdaq 100 Futures (NQ) 1 Hour Chart
Chart created with TradingView
Similar to the S&P 500 chart, Nasdaq 100 futures have also rallied sharply over the last few days. A similar dip below 13,000 was also bought up, propelling the index futures back to the key 14,000 level. So far, 14,000 has been a good level to fade, with price failing to sustain any break above the psychological threshold. This consolidation may simply be exhaustion following the meteoric 1,000 point rise over the last few sessions. Any clear break above this spot of resistance brings the October lows around 14,367 back into play as a first upside scalp.
Resources for Forex Traders
Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.
— Written by Brendan Fagan, Intern
To contact Brendan, use the comments section below or @BrendanFaganFX on Twitter