. Stock Futures Decline as Market Rally Stalls: S&P 500

Stock Futures Decline as Market Rally Stalls: S&P 500

22 Jun 2023

As the market rally stalls, stock futures continue to decline.

Fundamental Overview

Market Rally Stalls, Stock Futures Decline

Following three consecutive days of market declines, stock futures continue to fall. The S&P 500 futures indicated a 0.2% decrease. Investors are selling off some of the top-performing stocks that have been driving the stock market’s breakout.

Downgrading of Tesla Influences Stock Market

Tesla, a retail trader favorite and a top performer, faced a downgrade from a major Wall Street bank for the second time in as many days. This downgrade led to a 3% decline in Tesla’s shares during premarket trading. Adam Jonas, a longstanding supporter of Tesla, revised his rating from overweight to equal weight, citing a more balanced risk-reward ratio after the stock’s significant surge. Despite Tesla’s value doubling this year, the downgrade reflects caution among investors.

Weakest Daily Performance of S&P 500 Since June

On Wednesday, the S&P 500 experienced a decline of 0.5%, marking its weakest daily performance since June. This week, the market benchmark has already lost 1% of its value, putting an end to a five-week winning streak. The previous week saw the general market index reach its highest level in over a year.

Impact of Central Banks and Fed’s Stance on Inflation

Edward Moya, senior market analyst at Oanda, highlighted the influence of central banks on the Federal Reserve’s decision-making. Moya pointed out that Fed Chair Jerome Powell stated that lowering inflation still has a long way to go, suggesting that the Fed may continue tightening until the autumn. If other central banks show a willingness to implement multiple rate hikes, it may make it easier for the Fed to maintain its tightening stance.

S&P 500 Technical Analysis Daily Chart

Technical Overview

The S&P 500 is currently trading within an upward channel, indicating overall positive sentiment. It remains positioned above the 20-day and 50-day Simple Moving Averages (SMA), reinforcing its bullish trend. The Relative Strength Index (RSI) suggests bullishness, while the Stochastic oscillator indicates a downtrend.

  • Immediate resistance: 4412.25
  • Immediate support level: 4394.88

How to Trade S&P 500 This Week

Following a sharp rise, the S&P 500 formed an inverted hammer pattern at the top, indicating a potential trend reversal. Subsequently, the index resumed its decline by breaking the previous day’s low. Currently, the S&P 500 is trading near a crucial support zone, and further downward movement is possible if this zone is breached.

Trade Suggestion:

  • Sell at 4394.38
  • Target at 4350.16
  • Stop Loss at 4429.75

Please ensure a thorough analysis and consider your risk tolerance before making any trading decisions.

Conclusion

As the market rally loses momentum, stock futures decline, and the S&P 500 faces challenges. The downgrading of Tesla and the influence of central banks play significant roles in shaping market sentiment. Traders should closely monitor key levels and adapt their strategies accordingly to navigate