S&P 500 trend change possible
2023.02.06 07:00
S&P 500 trend change possible
We saw a nice rebound last week following the Fed’s decision to raise rates by 25 basis points; however, it appears that they are preparing to end the hawkish cycle within the next few months. Friday’s strong jobs data suggests that there may not be a recession risk, particularly if they actually end the hiking cycle.
As a result, equity markets moved in a positive direction; however, the US data on February 14 will be necessary for final speculations regarding additional rate increases. Keep in mind that inflation is not yet falling in Australia and Spain, for instance, and that stocks could be put back on the “back foot” if the US CPI suddenly rose because the Fed is likely to remain hawkish until they achieve their goal.
From an Elliott wave and sentiment standpoint, I am aware of a possible decline in stock prices, but only for a brief period of time, as prices trade at extremes of 2022 levels. In reality, “no fear” could mean that the market is overly optimistic, leading to an unexpected move. We should anticipate a flat correction with wave C’s bottom close to 3800. However, if prices rise above 4335, I believe wave C/3 is already in play.
