Currently, the main index of the US economy is in a correction around the level of 5337.0. With the end of the corporate earnings season, the performance of the index is now largely dependent on the bond market and macroeconomic statistics.
Yesterday, data released in the US showed a drop in existing home sales from 4.22 million in the previous month to 4.14 million in April, below the expectation of 4.21 million. Quotes were supported by the reduction in the 30-year mortgage rate, according to the Mortgage Bankers Association (MBA), from 7.08% to 7.01%, together with the increase in the mortgage market index from 198.1 points to 201.9 points.
The bond market has stabilized a bit. For the second consecutive week, the main debt securities did not show an upward trend. Yesterday, the 30-year bond yield fell to 4.635% from 4.818% of the last issue. The yield was 4.433%, instead of 4.502%, and the 20-year bond was trading at 4.641%, down from 4.690% on Monday.
Among the growth highlights in the index are First Solar Inc (NASDAQ:). (+18.69%), Moderna (NASDAQ 🙂 Inc. (+13.67%), Analog Devices Inc (NASDAQ 🙂). (+10.86%) and Enphase Energy (NASDAQ 🙂 Inc. (+8.73 %). On the other hand, the negative highlights were Target Corp. (NYSE:) (-8.03%), Lululemon Athletica (NASDAQ:) Inc. (-7.23%) and Freeport-McMoran Copper & Gold Inc (-). NYSE:).
Support and resistance levels
On the daily chart, the index quotes are moving towards the resistance line of the channel 5550.0-5110.0. Technical indicators continue to strengthen the buy signal: the fast EMAs on the “Alligator” indicator are moving away from the signal line and the AO histogram, which is located in the buy area, forms ascending bars.
Supports: 5277.0, 5110.0
Resistances: 5360.0, 5550.0
Business scenarios
If the growth of the asset continues and the price consolidates above the resistance level of 5360.0, buying positions will be favorable, with the target at 5550.0. I recommend setting the Stop Loss at 5300.0. The completion period is 7 days or more.
On the other hand, if the asset reverses and falls, and the price consolidates below the support level of 5277.0, short positions will be recommended, with a target of 5110.0. In this case, the Stop Loss should be set at 5330.0.
