To The Moon

The S&P 500 is possibly reaching a pivoting point, where it could try to defeat the bears of 2022. A stronger than expected jobs report in nonfarm payrolls last Friday came in at +263,000 vs expected of 200,000, while unemployment at 3.7% vs expected 3.7%, with average hourly earnings (month-over-month) +0.6% vs +0.3% expected and average hourly earnings (year-over-year) +5.1% vs +4.6% expected.

"A stronger-than-expected jobs report illustrates the wage problem that the Federal Reserve is facing," Independent Advisor Alliance Chief Investment Officer Chris Zaccarelli said in an emailed note. "Average hourly earnings continue to climb and that wage pressure, in conjunction with low unemployment, will keep inflationary pressures elevated."

As the markets digested the jobs report, opening lower on all three major indexes, they parred their losses as the day went on. The S&P 500 closed 0.12% lower, while Nasdaq composite closed 0.18% lower. The Dow Jones index managed to gain 0.10%, while the small caps Russell 2000 gained a strong 0.58%.

S&P 500 technical analysis

S&P 500 daily chart as of 2022-12-02

The daily chart of the S&P 500 shows that it has reached a convergence point, as it reached the top of the general long term downtrend line (in red), not surprisingly near the 200 daily moving average. The 200 MA was rejected in the middle of August, while it did break above the 200 MA towards the end of March but it rejected off the downtrend line.

Since mid October, it has continued to make newer highs as it moved up in a converging uptrend (in green) and now has approached the downtrend line (in red).

S&P 500 weekly chart as of 2022-12-02

From the weekly S&P 500 chart, it has managed to springboard off the 200 weekly moving average in the past, although past performances is never a guarantee of the future. The red downtrend line still holds for now.

Will the market manage to hold above the 200 MA & break above the red downtrend line as traders await the FOMC meeting on December 13-14, while the CPI inflation data for month of November 2022 will be out on December 13 at 8:30am ET. Currently, traders are expecting a 50 basis point hike at 78.2% probability according to the CME Fed Watch tool.

CME FedWatch Tool as of 2022-12-04

Will December be a good month for the stock markets, and give traders a Merry Christmas gift or end up bouncing off the red downtrend line to seal 2022 as a year where the bear was in control? Only time will tell.

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@TigerStars