The new round of escalation, fueled by pressure on the Fed, has set the news agenda for this week. For now, it is difficult to project the outcome. The US administration and the Federal Reserve may reach an agreement on interest rate policy. Such positive news could sure push the stock market up, but only briefly, since confidence in the stability of US financial markets has been undermined. The Fed’s independence is the cornerstone of confidence in the stock market and the US dollar. Restoring that confidence will take much longer.
In addition, there are concerns that the current makeup of the Fed may be less willing to ease policy, since it can be seen as a concession to political pressure. JPMorgan confirmed its point of view by saying that if existing policies do not change, there is a 90% chance of a US recession in 2025.
The market is going to face another challenge this week as 27% of the companies in the S&P 500 are expected to release their earnings reports.
The S&P 500’s hourly chart draws attention to a strong bullish candlestick of April 9, which was never fully retraced back during the corrective moves. A local high of 5,060 was formed not far from the open of the candlestick. The high is likely to attract the price of the index. With the general negative sentiment in the market, the level may be tested by the end of the week.
The overall recommendation is to sell SPX.
Profits should be taken at the level of 5,060.0. A Stop loss could be set at the level of 5,300.
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.
This content is for informational purposes only and is not intended to be investing advice.
