OpEX Week Ends with Slight Dip in the Market

During the overnight trading period, the S&P 500 futures displayed a downtrend, as they were unable to surpass the critical level of 4,100 and closed below a substantial level of support for the first time since February 1st. This led to a steady decline across the indices, which continued until early morning. However, there was a brief relief rally just before the opening bell.

Following the opening bell, there was a brief relief rally that drove the S&P 500 futures to their 21-day exponential moving average (EMA) of 4,090. However, at the daily mean, there was a significant rejection, which established a strong resistance level for the remainder of the trading session.

Following a decline from the daily mean, there was a rapid movement towards 4,055, which marked the initial level of support. The market discovered a minor consolidation zone during the opening drive, which persisted throughout the day’s trading.

Provided that the market remains below the 4,100 level, it is possible that a break downward from the previous consolidation phase may take place. Looking at the economic calendar, there are numerous catalysts in the following week that could potentially bring about this occurrence, should the market decide to take a downturn. Alternatively, there is a possibility of a false downward movement, intended to ensnare bears, if the market succeeds in re-establishing itself above the 4,100 level early next week.

Major Catalyst Next Week

Tuesday, there will be the S&P flash U.S. services and manufacturing Purchasing Managers Index (PMI) report. The market will keenly observe this report, anticipating that it will exceed expectations, similar to the prior U.S. Consumer Price Index (CPI) report. A better-than-anticipated report could reinforce the negative sentiment that has been slowly brewing beneath the surface, despite the market’s recent resilience. However, if the report turns out to be more moderate than anticipated, the contrasting reports could swiftly strengthen the bull case. The PMI report is scheduled to be released at 9:45 a.m. Eastern.

Wednesday, a Federal Open Market Committee (FOMC) meeting will be at 2 p.m. Eastern. Federal Reserve (Fed) Chairman Jerome Powell is not expected to speak at this event, but the meeting notes will still likely move the market in a volatile fashion to end the trading session. 

Thursday, weekly Initial and Continuing Jobless claim numbers will be announced at 8:30 a.m. Eastern along with Gross Domestic Product (GDP) numbers. GDP will give fourth-quarter numbers for 2022. Jobless claims will continue to signify the strength in the labor market or lack thereof. 

Friday, the Personal consumption expenditures (PCE) price index data will be released at 8:30 a.m. Eastern. Consumer spending is a great way to gauge inflation’s effects on the average consumer’s spending habits. 

Recent Range Breaks Lower and Market Goes Red

The Nasdaq and the S&P 500 were negative to close the session. The S&P 500 futures closed down 0.29%, losing 12 points, while the Nasdaq futures closed down 0.73%, falling 91 points. The Dow Jones futures did not follow, closing up 0.38%%, a gain of 130.