S&P 500 PRICE FORECAST:
- Heightened Volatility in the Afternoon Session has Dragged the S&P Lower.
- Is the Attack on an Air Base in Iraq a Sign of What is to Come?
- IG Client Sentiment Shows that Retail Traders are Long with 55% of Traders Currently Holding Long Positions. A Sign of Further Downside Potential Given the Contrarian View to Client Sentiment Adopted at DailyFX?
- To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section.
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The S&P 500 looked set to arrest its slide today following comments from Federal Reserve Chair Jerome Powell. The Fed Chair stated that the Fed would be proceeding carefully on further rate hikes as the rising yield environment is helping tighten financial conditions. The impact of Fed Chair Powell’s comments saw the probability of a hold from the Fed in December jump by around 10% to 69.5% helping risk appetite.
Source: CME FedWatch Tool
The bullish bounce proved short lived however, as the SPX turned red for the day as news filtered through that Israel had received the ‘green light’ for the ground offensive into Gaza. From my perspective I see this as the reason for the drop in the SPX as the US session progressed. A ground offensive into Gaza has the potential to widen the conflict in the Middle East. This was partially confirmed as an Iraqi resistance group claimed responsibility for an attack on a US base in Iraq called Ain Al-Asad. This could escalate matters quickly and volatility could rise during the Asian Session and continue into tomorrow's European Open.
US EARNINGS
US earnings yesterday (after market closed) saw two big names in Netflix and Tesla report earnings. They came in at opposite ends of the spectrum with Tesla missing estimates while Netflix surprised to the upside, rising around 13% in afterhours trade.
Source: TradingView
Earnings continued today with Blackstone slipping around 6% as the Q3 distributable earnings fell more than expected. This came about due to a decline in asset sales in its real estate business. AT&T on the other hand rose just above 7% as the Telecom company raised its free cashflow forecast. After market close today we have Intuitive Surgical before attention will turn to American Express and SLB expected to report prior to the market open tomorrow.
For all market-moving earnings releases, see theDailyFX Earnings Calendar
S&P 500 TECHNICAL OUTLOOK
Form a technical perspective, the S&P has bounced off a key area of support before rallying some 200 points toward the key resistance level resting at the 4400 mark. A further challenge for the S&P is the completion of a death cross pattern which would hint at further downside ahead as the 50-day MA crossed below the 100-day MA.
The SPX failed to hold above the 20-day MA today dropping lower on its way toward the 200-day MA. A break lower here would bring the October 4 swing low at 4200 into focus.
Key Levels to Keep an Eye On:
Support levels:
- 4244 (200-day MA)
- 4200
- 4165
Resistance levels:
- 4325
- 4400
- 4417 (100-day MA)
S&P 500 October 19, 2023
Source: TradingView, Chart Prepared by Zain Vawda
IG CLIENT SENTIMENT
Taking a quick look at the IG Client Sentiment, 55% of retail traders now holding long positions. Given the Contrarian View to Crowd Sentiment Adopted Here at DailyFX, is this a sign that the SPX may continue to fall?
For a more in-depth look at Client Sentiment on the SPX and how to use it in your trading download your free guide below!!
| Change in | Longs | Shorts | OI |
| Daily | -7% | 6% | 0% |
| Weekly | -3% | 4% | 1% |
Written by: Zain Vawda, Markets Writer for DailyFX.com
Contact and follow Zain on Twitter: @zvawda
