Market Update: SPX500 new swing high continuation?

September 16, 2021
by Joseph Jeffriess, Market Analyst

Hi traders, the SPX500 caught our attention this morning after yesterday’s fightback rally has produced several bullish signs. While looking positive, we still need to see a bit more from buyers and the market faces external influences that could have an impact.

Before we get onto the price analysis, we should go over some of the external influences that could have a dramatic impact on the current picture. Inflation and tapering look to be or could be the biggest influence for stocks moving forward. The current rally we have been watching since 2020 was created in part by the Fed’s move to reassure the markets with QE. This example was also in 2008 after the GFC. Tapering is a reduction of that program and how it’s done and when can have a direct influence as the easy policy that has fed buying will start to be rolled back. Markets may discount it or we could see selling develop.

This round, nothing has been concrete. Tapering was announced due to rising inflation in the US that funny enough a by-product of government spending. PPI and or measurements have also been increasing so it’s not only around government spending. CPI, July shocked but August disappointed. This continues the current uncertainty merry go round. Traders are looking to next weeks Fed meeting for more details on when we could see it start. Jobs data has been another factor but like CPI they’ve been hot and cold continuing the cycle of uncertainty.

Looking at the daily SPX500. Price action wise yesterday’s hold our eye as it set up a new higher low continuing the current series we’re seeing. The reversal point also continued resistance becoming new support at the HL point. These all look rather good from a buyer point of view, but we will want to see today’s candle wither hit new weekly highs or close above support. A move back to support or a close below it is a worry for buyers in the short term.

As discussed above, tapering could also change the picture but more on a Med-Longer time frame. Positive news we would look for the trend to continue. Shock bad news could send some ripple through buyer momentum and we might see a rush to exit. Could that turn the overall trend? That could depend on the exact details from the Fed and how the market sees it.

SPX500 Daily

All times are AEDT.