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S&P 500 Local Corrective Trend Continues

11/10/2022 1:41 PM

The American market significantly slowed down the dynamics in anticipation of the results of the Midterm elections to the US Congress, as well as data on inflation. The S&P 500 is currently correcting, trading at 3759.0.

Based on the interim results of the voting, it is quite likely that different parties will control the Senate and the House of Representatives, which will create a so-called "political impasse". This may mean that the adoption of new legislative initiatives will be difficult, and, therefore, the likelihood of the final adoption of a bill to raise corporate taxes may be reduced, which is a positive signal for the stock market.

Today, data on the Consumer Price Index for October, as well as a report on Initial Jobless Claims will be published in the US. According to analysts' forecasts, inflation in annual terms may drop to 8.0% from 8.2%, and the Core CPI may adjust to 6.5% from 6.6% a month earlier. As for the labor market, analysts suggest that the number of Initial Jobless Claims will increase to 220.0 thousand from 217.0 thousand a week earlier, which may be a negative signal for the US Federal Reserve amid a possible slowdown in the rate increase.

The growth leaders in the index are Akamai Technologies Inc. (+6.19%), Gen Digital Inc. (+6.01%), Bio-Rad Laboratories Inc. (+5.67%), Meta Platforms Inc. (+5.18%).

Among the leaders of the decline are The Walt Disney Co. (-13.16%), Occidental Petroleum Corp. (-9.22%), Coterra Energy Inc. (-8.20%).

The index quotes continued the local corrective trend, more and more clearly forming the Flag pattern on the daily chart.

Technical indicators maintain the buy signal: the fast EMAs of the Alligator indicator are above the signal line, and the histogram of the AO oscillator is trading in the buy zone, forming ascending bars.

Support levels: 3700.0, 3570.0. | Resistance levels: 3830.0, 4000.0.

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