S&P 500 (SPY) Report – 12/14/22

Good morning traders!

The S&P 500 ($SPY) is trading near yesterday’s close. Let’s get into it…

The consumer price index data released on Tuesday showed that inflation declined for a second time in a row. This is hard evidence that inflation rates are declining and stocks rose on that news. Additionally, there are good reasons to think positively about the future. Oil prices have returned to their early-year levels, before the significant increase that followed Russia’s invasion of Ukraine. Energy prices will significantly reduce headline inflation over the coming months if they remain where they are. Jerome Powell, the chairman of the Federal Reserve, will also find it more difficult to appear aggressive in light of today’s interest-rate decision, as of recent inflation data.

No one should get very thrilled just yet, as there was reason for caution following the inflation number from last month. The Fed, for one, wants to focus on core inflation, which is still high. The exclusion of oil price surges from the headline inflation estimates should not really affect, in theory. Second, there aren’t many indications of a looser labor market, which is what Fed policymakers are really hoping to see as an indication that pricing pressures are easing. Third, Powell will need a lot of proof before proclaiming victory against inflation, just as the Fed was hesitant to begin raising interest rates at this time last year when inflation began to increase. Although there may be more gradual increases in interest rates, the trend is still upward.

While forecasts for the Fed rate range widely, many economists predict it will eventually reach 5%. Numerous factors in the upcoming months will determine how much higher or lower rates will need to go.

Potential Intraday Resistance Levels:
EOD VWAP: $404.15
Pre-Market High: $403.64

Potential Intraday Support Levels:
50D SMA (1hr): $400.60
200D SMA (1hr): $398.51

Note: Moving averages are reported from the previous trading session and will change during the next trading session. 

Wednesday Economic Events:
MBA Mortgage Applications 7:00am ET
Import and Export Prices 8:30am ET
Atl. Fed Business Inflation 10:00am ET
EIA Petroleum Report 10:30am ET – High Volatility Expected 

Fed Speaker Scheduled:
FOMC Announcement 2:00pm ET – High Volatility Expected
Fed Chair Press Conf. 2:30pm ET – High Volatility Expected 

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