S&P 500 and Nasdaq week ahead: Endurance or a recess. This week, the US debt ceiling talks and Fed remarks are in the spotlight.
S&P 500 NASDAQ 100, NDX, and SPX – Perspective
The US stock markets are searching for strong triggers that seem to be fading as the earnings season comes to an end. The long list of adverse factors did, in fact, throw a pall over the multi-week upswing. Nevertheless, there are no indications of an upswing reversal on technical graphs.
The US debt ceiling remains the markets’ top urgent concern. This worry may be clearer in the options market than in the spot market. The S&P 500 daily spread is the smallest in months. Real volatility in the Nasdaq 100 index is at its lowest since the start of 2022. While open interest for VIX call options has risen to a 5-year peak.
Although the US has previously encountered a debt ceiling and a deadlock. The present price movement may indicate that investors are confident that a deal will finally be found. The good thing is the fact there seems to have been a shift in negotiations between the White House and the congressional Republicans. President Joe Biden stated on Saturday that there was “actual” debate” about certain modifications that everyone might make. “We are still not arrived yet.”
The Debit Ceiling is a Nagging Factor for the markets
The road to a final conclusion may be difficult, which would keep market and corporate confidence in control. Unless the situation is different. There have already been signs that the pressure from stricter lending rules has begun to hit firms. Economic activity is anticipated to suffer. As a consequence of stiffer criteria for credit brought on by the instability in the banking industry.
The market anticipates the Fed to ease part of the tightening. But this year’s rate decreases face a higher barrier due to the persistent rising costs. Investors will be watching for evidence from Powell of the Fed later this week about this regard. Having said that, the technical graphs of the S&P 500 and the Nasdaq 100 index show no evidence of a correction amidst the growing ambiguity.
S&P 500: The rally falters
The graphs demonstrate the continued bullishness of the S&P 500 index’s general direction. The index lately seemed to be set in a phase of stabilization within the broader bullish framework. Which was limited by a challenging obstacle at the Feb top of 4195. To confirm the 7-month-long rally, the index must rise beyond 4195.
The 4050 end-April bottom provides significant support on the downside. Any breach under the support would signal to indicate the upward push was no more as potent. And would indicate that the process of the consolidation time frame was continuing. Nevertheless, the 200-day moving average (which is now at roughly 3975) has a significant safety margin.
Nasdaq 100: Moving toward the peak of August
Owing to the rush in investment into technology funds—possibly spurred on by a shift out of the afflicted financial sector—The Nasdaq 100 index has reached a new 9-month top, reinforcing its upward trend. Furthermore, the way for the August peak of 13720 has been opened up by the current breach over the early -April peak of 13205. The weekly graph shows that despite increased doubts, the upward trend is still intact.
