S&P 500 Approaching Major Resistance Ahead of Fed

Supported overall by better than expected results from US companies, the S&P 500 is back to the major resistance at 4200. That said, we note that the rebound is running out of fuel ahead of the FED meeting in tomorrow. Indeed, the last two weekly candles (not counting the one for the week) have resulted in an extremely hesitant configuration whether in hangman or doji. Fortunately, there has been no further downside to date.

The underlying trend since October 2022 remains favorable to bulls. On the one hand, prices are now above the ascending line with two solidly constructed supports, 3500 and 3820. On the other hand, the technical indicators remain above their respective waterlines. But even better, there are no early signs of bearish divergences.

Assuming that the first weighting of the American index, Apple aligns satisfactory results and growth prospects, the S&P 500 could finally cross 4200, ie the top of its range (orange rectangle). With the possibility that the rebound will extend towards 4300 over the next few weeks. This would represent an upside potential of nearly 3.2%. Conversely, a failure below 4200 could bring the S&P 500 back towards 4000 or even 3800 if volatility were to resurface violently. Below 3800, we would enter a warning zone potentially leading to a bear market rally since January 2022.

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