NASDAQ Index, SP500, Dow Jones Analysis – SP500 Tests Yearly Highs

Key Insights

• SP500 moved towards the 4500 level as Inflation Rate declined to new lows. 
• NASDAQ continued its attempts to settle above the 15,300 level. 
• Dow Jones faced significant resistance at the high end of the current trading range. 

SP500

SP500 tested new highs as traders reacted to the better-than-expected inflation reports. Inflation Rate declined from 4% in May to 3% in June, while Core Inflation Rate decreased from 5.3% to 4.8%. Traders expect that Fed will raise the interest rate by 25 bps at the next meeting in July. As inflation is moving lower, Fed is expected to stop after the July rate hike. Currently, traders believe that Fed will keep the federal funds rate at 525 – 550 bps until the end of the year. The end of the rate hike cycle is near, so traders are optimistic.

Taking a look at the daily chart, SP500 moved above the previous resistance at 4430 – 4450 and is heading towards the next resistance, which is located in the 4575 – 4600 range. RSI is close to the overbought territory, but there is enough room to gain additional upside momentum.

NASDAQ

NASDAQ continues its attempts to settle above the resistance at 15,200 – 15,300 as traders focus on the strong pullback in Treasury yields. Demand for tech stocks stays strong, which is bullish for the tech-heavy NASDAQ.

NASDAQ must settle above the 15,300 level to gain additional upside momentum. If NASDAQ stays above 15,300, it will move towards the next resistance in the 15,900 – 16,000 area.

Dow Jones

Dow Jones faced strong resistance in the 34,500 – 34,600 range and pulled back. The strong pullbacks in Cisco and UnitedHealth Group stocks had a negative impact on the index.

From the technical point of view, Dow Jones remains stuck in the wide range between the support at 33,600 and the resistance at 34,600. A move out of this range will provide Dow Jones with an opportunity to gain additional momentum.

For a look at all of today’s economic events, check out our economic calendar.