Fed Holds Steady, Again
- The Fed kept rates in a range of 4.25% to 4.5% but the central bank still signaled two rate cuts this year while simultaneously hinting at a stagflationary threat. Fed Chair Powell said they are beginning to see some effects of tariffs on inflation while adding the Fed is well positioned to wait before making any adjustments to rates.
- The charts for the major indexes continue to look bullish with the S&P and the Nasdaq flashing early golden cross signals. This is when the 50-day moving average appears on track to clear the 200-day moving average at some point over the near-term and typically preludes higher highs.
- Key support levels that we highlighted for the week continue to hold: Nasdaq 19,250; S&P 5,950; Russell 2,075; and Dow 42,000. Once again, a break below these levels on Friday would be a slightly bearish development.
The stock market traded in a tight range throughout Wednesday’s session as the Fed left rates unchanged, as most pundits expected. The mixed session was slightly bullish as key support levels have been holding throughout the week.
The Nasdaq traded up to 19,660 while settling at 19,546 (+0.1%). Key resistance at 19,800 held. Support is at 19,500.
The S&P 500 closed at 5,980 (-0.03%). Key support at 5,950 held. Resistance is at 6,050.
The Dow kissed a low of 42,118 before ending at 42,171 (-0.1%). Support at 42,000 held. Resistance is at 42,500.
Earnings and Economic News
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Technical Outlook and Market Thoughts
The Fed kept rates in a range of 4.25% to 4.5% but the central bank still signaled two rate cuts this year while simultaneously hinting at a stagflationary threat. Fed Chair Powell said they are beginning to see some effects of tariffs on inflation while adding the Fed is well positioned to wait before making any adjustments to rates.
The Nasdaq as it has been holding 19,250 for 12-straight sessions. Continued closes above this level keeps 19,750-20,000 in the picture.
Closes below 19,250 and out of the uptrend channel could lead to a quick 4% selloff down to 18,500 and the 200-day moving average.
The S&P 500 closed below support at 6,000 for the second-straight day with 5,950 needing to hold into the weekend. If not, a retest to 5,850-5,800 and the 200-day moving average, is likely.
Key resistance remains at 6,050. A move above 6,075 would likely suggest strength to 6,100-6,150 with the all-time high at 6,147.
The Russell 2000 has been holding 2,100 all week with a close back above 2,135 ahead of the weekend being bullish. More important hurdles remain at 2,175 and the 200-day moving average on closes back above 2,135.
Backup support is at 2,075. We mentioned the next major trend could come on a recovery of 2,135 (bullish), or a drop below 2,075 (bearish), with these levels also holding all week.
The Dow has basically been in a 1,000-point trading range between 42,000-43,000 since the May 27th breakout above the former. Closes above 43,000 and the 200-day moving average would be bullish for strength to 43,250-43,500.
A close below support at 42,000 could lead to weakness down to 41,250-41,000 and the 50-day moving average.
The Volatility Index (VIX) closed a tad above 20, of course it did, to give us a neutral reading for Friday’s session. Upper support at 20-19.50 was tripped but held with the low at 19.59.
Near-term resistance is at 22-22.50. As a reminder, closes above 24-25 and the 50-day moving average would reopen upside risk to 30.
Key support levels that we highlighted for the week continue to hold: Nasdaq 19,250; S&P 5,950; Russell 2,075; and a readjusted Dow at 42,000. Once again, a break below these levels on Friday would be a slightly bearish development.
The charts for the major indexes continue to look bullish with the S&P and the Nasdaq flashing golden cross signals. This is when the 50-day moving average appears on track to clear the 200-day moving average at some point over the near-term and typically preludes higher highs.