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The Stock Market Rally May Be Near Its End

Published 08/05/2022, 01:09 AM
Updated 09/20/2023, 06:34 AM

Stocks finished the day flat yesterday, ahead of the big job report. Estimates for 230,000 new jobs to have been created in July, down from 381,000 in June. But the unemployment rate is expected to remain flat at 3.6%. But the considerable number will be the average hourly earnings, which are expected to rise 4.9% y/y versus 5.1% last month. I think that the wage number is the biggest number to watch, as a number higher than estimates could suggest upward pressures on wages.

This recent rally, has at this point retraced the entire decline from mid-June. We saw a similar type of patterns in April and May. With the entire June drop now retraced, this has typically been when the market has run into trouble.

S&P 500 Futures, 1-Hour Chart

Additionally, there is a rising wedge pattern that is present, and that would be a bearish reversal pattern. If this plays out the way previous moves have played out, then I would expect the market to give back this entire rally.

S&P 500 Futures, 4-Hr Chart

For the NASDAQ the picture is not any better, with the futures showing a clear bump and run pattern, and also what appears to be a rising wedge pattern. Like the S&P 500, I would expect the majority, if not the entire, rally to melt away.

This is not to say this shall happen or start today I am not saying that. I am saying that when the pattern has completed. The patterns are close to being complete, but there is some more room if they choose to rise a bit further. But once the trend line on the wedge breaks I would think we would see the start of a decline.

Nasdaq Futures 4-Hr Chart

JPMorgan

JPMorgan (NYSE:JPM) may be telling us something, as the stock struggle to push above $116. It now finds itself back at support just above $110. That support level needs to hold, because if it breaks I would think that the stock retest the lows.

JPMorgan Chase 4-Hr Chart

That’s going to be all until the weekend.

Original Post

Latest comments

I think that the bigger issue is that yields are pulling back off major resistance and if they even do a 38 backup off the recent highs to the deadlows that still gives room to fall below 2.5% which should give more tailwind to equities. I don't see a pullback off these levels bro, I'm thinking S&P at least hits the 50 week ma around 4350.
Average Hourly Earnings are definitely key, RSI in overbought territory. I think APPL has pulled this train about as far as it can.
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