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Stocks fluctuate ahead of tomorrow’s Fed – is it just a consolidation before another leg up?

The S&P 500 index gained 0.40% on Monday as it retraced some of the recent declines. The broad stock market continues to fluctuate following its last week’s Thursday retreat of 0.7%. The market bounced down from Wednesday’s new medium-term high of 4,578.43. Recently stocks were gaining ahead of quarterly earnings releases, among other factors. On Wednesday the S&P 500 was the highest since early April of 2022. There is still a lot of uncertainty concerning monetary policy, and some technology/AI stocks’ valuation concerns, but the investors’ sentiment remains bullish. The market is waiting for more quarterly corporate earnings releases and the important FOMC release tomorrow.

Stocks will likely open 0.1% higher this morning and the S&P 500 may see more short-term uncertainty. The market broke below its short-term upward trend line but it is still trading way above an over-month-long upward trend line as we can see on the daily chart:

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Futures Contract Trades Below 4,600

Let’s take a look at the hourly chart of the S&P 500 futures contract. Recently it rallied above the 4,600 level and on Thursday it retreated to around 4,560. The nearest important support level remains at 4,560 and the resistance level is at 4,600-4,620.

(Click on image to enlarge)

Conclusion

The S&P 500 is expected to open virtually flat today. The market will be waiting for the important quarterly earnings releases. Today after the session’s close we will get reports from GOOG and MSFT, among others. Investors will also be waiting for tomorrow’s FOMC Statement release. There have been no confirmed negative signals so far and for now, it looks like a flat correction within an uptrend.

Here’s the breakdown:

• The S&P 500 trades sideways following its early July rally.
• There have been no confirmed negative signals.
• In my opinion, the short-term outlook is still bullish.

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