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Trends & Analysis
News
Is Amazon a best-buy for the holidays?
News
China stocks end mixed despite PBoC announcement
News
Asia stocks rise on prospects of Fed easing hikes
News
HP joins the tech layoff spree
News
Will the euro give the bulls 200 reasons to smile?
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Best Buy shares spike amid upbeat Q3 print

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Asset Watch

Could the S&P 500 rally 10%?

 

Wednesday, November 2, 2022

It’s decision day for the FOMC, and investors are expecting another 75 basis point rate hike. But after the Bank of Canada surprised the markets with a 50 basis point increase on Oct. 26, a similar move by the Fed could spark another risk rally.
While JPMorgan’s trading team described the outcome as the “most bullish” and the “least likely,” they said a smaller-than-expected rate hike and dovish rhetoric from Fed Chairman Jerome Powell could elicit a 10% rally for the S&P 500.
When analysing the various scenarios, they concluded, “we think the risk/reward is to the upside,” as “the market had every reason to retest [the] lows given the disappointment from megacap tech earnings and still moved higher.”

So while volatility should be amplified, will the technicals provide the most important clue?

When examining the S&P 500’s two bear market rallies in 2022, both spurts of optimism coincided with the index rallying above and then holding its 10-day moving average. Likewise, when doubt crept in and short-term pullbacks occurred in July and August, the 10-day MA acted as support and higher highs materialised.

Therefore, with the 10-day MA ending the Nov. 1 session at 3,803.72, a close above or below the key level on Nov. 2 may determine whether or not there is more room to run.

As a result, should we expect a third bullish rendition, or will Powell play the villain during his press conference?


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