While the FOMC is not expected to rock the market’s boat today, a spectacular 11% rise in NVDA and another wrinkle in the Middle East conflict are certain to induce volatility.
continued for members…
This puts SPX back above its SMA10 at 5486, with the onus now on the bulls to hold that support – ideally after a backtest.
Note that VIX has dropped below its own SMA10 and will need to remain below this (now) resistance for stocks’ bounce to last. A much bigger development would be a drop back below the SMA200 at 14.08.
The currency picture is net supportive of stocks, with DXY down on a rebound in EURUSD exacerbating the drop in USDJPY.
The potential fly in all this bullish ointment is that Israel killed Hamas leader Ismail Haniyeh in Iran, an assassination almost certain to further destabilize the region.
It sent oil futures 3% higher, almost backtesting the SMA200 again, and boosted RB by about 2.5% where they did backtest the SMA200 and close a recent gap.
Keep in mind that the EIA releases a new oil inventories report at 10:30 ET.
Ironically, the move sent the 10Y lower due to the increased risk of a broader military conflict. It broke below horizontal support and send the 2s10s lower to -25 bps.
The FOMC’s rate decision will be released at 2pm ET, with a press conference to follow.
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BTW, I likely will be unable to post next Tuesday Aug 6 and possibly on Wednesday the 7th.