Buying SPX from level of 5770

The Fed started rate cuttings in September last year, making a larger-than-usual move of 0.5% to protect the labor market from the upcoming decline. According to that period data, the unemployment rate jumped to 4.3% in July. 

Stronger economic data largely dispelled those concerns by December, when the US central bank cut the overnight interest rate to the current range of 4.25–4.50%.

The US employment report released last Friday showed that employers created 256,000 jobs in December, significantly surpassing economists’ forecasts. Additionally, the unemployment rate declined from 4.2% to 4.1%, strengthening the market’s expectations that the Federal Reserve will keep interest rates high for longer to curb the overheating economy.

This news fuelled concerns about inflation, which has stubbornly remained above the Fed’s target of 2%. Another blow to the further rate cut prospects and the Fed's confidence in lower inflation was consumers’ anticipation of 3.3% price growth next year, which is a sharp rise from previous months.

Traders are expecting the central bank to wait until at least June to lower its interest rate. The chances of the Fed raising rates have increased due to the recurring inflation concerns. This scenario would have been inconceivable a few months ago, when investors were expecting the interest rates to fall to about 2.8% by the end of the year. Now the estimated range is 4.25–4.5%. Renewed labor market activity creates a new dilemma, strengthening the arguments in favor of inflationary pressure not being fully suppressed and creating a potential conflict with Trump, who has already claimed that interest rates are too high. 

From the technical point of view, the S&P 500 is likely to test the 5770 level, after which it will turn upwards with a target of 5875.

The overall recommendation is to buy S&P 500 from the level of 5770.

Profits should be taken at the level of 5875. A Stop loss could be set at the level of 5660.

The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.