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S&P 500: Are Bulls Coming Back?

By Sunshine Profits (Paul Rejczak)Market OverviewJan 12, 2022 10:07AM ET
www.investing.com/analysis/sp-500-are-bulls-coming-back-200614498
S&P 500: Are Bulls Coming Back?
By Sunshine Profits (Paul Rejczak)   |  Jan 12, 2022 10:07AM ET
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Stocks retraced some more of their recent declines on Tuesday. Will the market continue higher following today’s consumer inflation data?

The S&P 500 index gained 0.92% yesterday, as it got back above the 4,700 level. The broad stock market’s gauge extended its advance following Monday’s upward reversal from the local low of 4,582.24. It was a dip-buying opportunity. However, the short-term advance still looks like an upward correction within a new downtrend. The broad stock market continues to trade within an over two-month-long consolidation. Late December – early January consolidation along the 4,800 level was a topping pattern, and the index fell to its previous trading range.

On Dec. 3, the index fell to the local low of 4,495.12, and it was 5.24% below the previous record high. So it was a pretty mild downward correction or just a consolidation following last year’s advances.

The nearest important resistance level is 4,700-4,720, and the next resistance level is around 4,750. On the other hand, the support level is at 4,650. And the important support level is now at 4,580-4,600, marked by Monday’s daily low. The S&P 500 is close to its November-December local highs again, as we can see on the daily chart:

S&P 500 Daily Chart.
S&P 500 Daily Chart.

Apple Bounced From $170 Price Level

Last week, Apple (NASDAQ:AAPL) stock broke below its two-month-long upward trend line after reaching the new record high of $182.94 on Tuesday. So far, it looks like a downward correction, and the nearest important support level is at $165-170, marked by the previous highs and lows. The stock trades within an over month-long consolidation of around $170-180.

Is this a medium-term topping pattern? It’s getting very hard to fundamentally justify Apple’s current market capitalization of around $3 trillion.

AAPL Daily Chart.
AAPL Daily Chart.

Conclusion 

The Consumer Price Index release was slightly higher than expected at +0.5% m/m. It appears that the broad stock market will retrace more of the recent declines. However, we may see a profit-taking action later in the day.

Here’s the breakdown:

  • The S&P 500 extended its short-term uptrend yesterday. It may still be a correction within a downtrend or some further consolidation on the 4,700 level.
  • In our opinion, no positions are currently justified from the risk/reward point of view.
S&P 500: Are Bulls Coming Back?
 

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S&P 500: Are Bulls Coming Back?

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