S&P 500: 4400 Resistance Looms as Index Draws Fresh Breath From Hot Retail Sales
Yesterday was a busy day for stocks, as rates exploded to the upside following the hot retail sales report. This led to a sharp decline in the morning for stocks, only for the declines to be erased and the index to turn positive midday. However, those gains were later returned, with the S&P 500 finishing flat.
The big gamma level is at 4,400, which will be significant resistance for the S&P 500 the rest of this week, as well as two big events coming with a 20-year Treasury auction yesterday at 1 PM ET and then Powell speaking on Thursday at noon.
So there is a pretty good chance we see implied volatility move up into the two events, and with resistance at 4,400 and implied volatility on the rise, it could lead to that drop to lower, erasing the move higher off the lows on October 6.
Wave C equals 78.6% of wave A of larger C, so yesterday’s high at 4,392 works for a potential top.
The 10-year rose sharply yesterday and made a new cycle closing high; it didn’t take long for it to come and test the highs of the past 2-weeks. If it did break out of a bull flag, then I think it is possible for the 10-year to push higher to around 5.25%. The economy and inflation rates support higher yields at this point.
For now, oil has been playing nice, but I’m not sure how much longer that will be the case, especially if a bull flag has formed in oil; if so, then oil is probably heading back over $90 on WTI.
Today we will get into the heart of earnings season with results from Tesla (NASDAQ:TSLA). The market is not expecting a big move. An at-the-money long straddle for expiration on Friday suggests the stock moves about 5.7% the rest of the week.
What is noticeably different going into this quarter’s report versus prior quarters is that
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