The bulk of third quarter earnings were reported over the past fortnight . Numerous stocks, especially tech stocks, fell pointedly on better than expected profit and direction. Consequently, the stock exchange was more predictable than many individual stocks. SPX, for instance , generally traded within 1,170 and 1,200, i.e. multi-year support at 1,165 and therefore the 200 day MA at 1,200. Also, the economic data reported Friday showed real GDP expanded at a 3.8% annual rate during the third quarter. So, there was no “soft-patch” afterall.
However, the market continues to stress about inflation. The GDP Chain Price Deflator, also reported Friday, rose at a 3.1% annual rate during the third quarter, which was much above the two .6% rate reported for the second quarter. Recently, the market has been fearful that the FOMC will still tighten the cash supply well into next year. On Tuesday, the FOMC is predicted to boost the Fed Funds Rate another 25 basis points to 4%. that might add up to 300 basis points of hikes (25 basis points at each meeting) over the past 16 months.
The chart below may be a Nasdaq weekly chart. Nasdaq has been creating a rising wedge for about two years. The MACD indicator has been occupation the other direction of the worth chart (i.e. negative divergence). The three highs within the wedge fit well. However, it’s uncertain if the third low also will provides a good fit. The wedge is compressing, which should still generate volatility. Many intermediate-term technical indicators, e.g. NYSE Summation Index, NYSE Oscillator MAs, CBOE Put/Call, etc., suggest the market are going to be higher sometime within subsequent few months.
The Nasdaq Rising Wedge and therefore the SPX multi-year support and resistance levels, between 1,165 and 1,250, are often used together for general buying and selling points. However, it is also possible the market will still trade well within these ranges for a few time with greater volatility. Nonetheless, I believe, there’ll be many excellent short-term and intermediate-term trading opportunities over subsequent few months, find out more on http://www.nas100brokers.com/volatility75index.html.