S&P 500 Futures Clear 4,375, Face Call Wall at 4,400: What to Watch Out for Next

investing.com:

Stocks finished the day flatish, no surprise, given the rally last week and the trends we have seen over the last 18 months. As of yesterday, the S&P 500 call wall is still at 4,400, and that means this index will remain capped until such time the call wall rolls higher or we begin to see the index trade lower again.

I continue to think that last week was nothing more than a gamma squeeze, which will end in the same manner other gamma squeezes have ended, which is a return to the origin at 4,100. Besides, when I used to be called a Permabull, I would always be reminded how markets don’t bottom on Friday, which is what October 27 was.

These rallies have become unable at best throughout 2022, and they tend to end similarly. If correct, the call wall at 4,400 should act as a ceiling on stocks advancing, and eventually, we should trade lower again, just as we have seen since the mid-summer and most of last year.

Rates were higher yesterday, with the 10-year up and holding to support at the 50-day moving average, but more importantly, at a short-term support level of around 4.5%. We need to see the 10-year get above 4.8% to get a better sense of where the 10-year may be heading from here. The Treasury actions that start today will give us a big clue into this.

If rates go down, then it could help to push the call wall on the S&P 500 up, push the index up, and possibly return it to 4,500.

But at this point, there is no evidence to support that, and at this point, given my view on the economy and inflation, I tend to think that rates aren’t going to be coming down but instead still going higher.

But again, this week will fill in a lot of information. So, I am trying to be open-minded. So essentially, the S&P 500 continues to