As the Federal Reserve raises interest rates, traders are eyeing resistance and support levels for the S&P 500 rallies. The stock market is likely to test resistance around the previous highs on its way up.
And here is what happened when the NFP report came out. The S&P 500 Rally soared again as it headed toward resistance around the previous highs, with NFPs continuing to rise in anticipation of Fed Rate Raises. I would expect the next rally to pass through support at the previous highs, and then towards resistance.
There are other reasons why the stock market is looking great. In fact, I could name four of them. They are the Globalization Economic Climate, Building Pressure on Chinese Credit, Stock Market Fraud Scandal and Market Outrage of Certain Corporate and Government Officials.
The NFP report is on its way to becoming a huge scandal that will attract more news media coverage and give traders a reason to look out for it. If it is such a big deal, shouldn’t we see a recession? We do not.
The current recession started after the Wall Street Crash in September of 2020. Global economic expansion since then has been slower than most analysts expected. Real GDP Growth slowed down and we have had large scale layoffs and bankruptcies. As a result, stock prices were forced to fall.
As a result, the stock market is now showing some signs of weakness. The Dow has lost another thousand points, and all of the major indexes are dropping lower again.
The reason for this is that resistance levels are being tested. Supply is tightening up, and manufacturing prices are starting to fall as the inventory picks up.
Market participants should be aware that the stock market does not always reflect inflation and price pressures. Inflation can be quite slow and the pace of price rises can vary from quarter to quarter.
For example, the Stock Market opened at three hundred dollars for the year. This week, it has dropped to under two hundred dollars.
If the index does continue to fall, it will enter a bear market and it will be important to focus on resistance levels around the previous highs. As I mentioned before, resistance can take the form of chart patterns, a bullish pattern, a reversal pattern or a replacement pattern.
Resistance can also be a rise above a trend line. Resistance is often broken in these patterns, which make it more likely that the trend will continue.
One last point is that you should look for support around resistance levels, especially if the price is retracing from one high to another. You should watch for breaking points that might lead to a reversal pattern. A major breakout may take place around the time of the next weekly close or shortly thereafter.