After Daily Highs, US Shares Prepared To Close Flat

Improved market mood caused a jump off the lows, but it was short-lived, trading near the open of the session. The stock market was trying to rebound from its worst day of selling in months Tuesday even after President Joe Biden announced a ban on Russian oil.

By afternoon, the Dow Jones Industrial Average was up 43 points, or 0.1%, after the benchmark tumbled 797 points into correction territory Monday. The S&P 500 was flat, and the Nasdaq Composite gained 0.4% after it ended Monday in a bear market. All three major indexes were in the red earlier in the day.

Since the beginning of 2022, the S&P 500 witnessed a fall of 14.52%, attributed to different factors. First, the Fed’s upcoming tightening cycle. Second, Russia’s invasion of Ukraine resulting in a crisis in the commodity market.

In addition to soaring oil prices to above $100 per barrel; wheat is printing record highs, while precious and base metals have reached gains as high as 250%, that in the case of nickel.

On Tuesday, the S&P 500 settles at 4201, grinding lower some 0.01%, on improved market mood, spurred by an announcement of Ukraine not insisting on joining NATO, as reported by AFP.

Technically speaking; the S&P is bearish biased. The daily moving averages are residing above the price depict the said level, the successive series of lower highs/lower lows, breaking previous support levels and paving the way for further losses.

During the day, the S&P 500 jumped off June 18, 2021, lows around 4164.40, but faced strong resistance on October 4, 2021, support-turned-resistance at 4276.58.

With the Relative Strength Index (RSI) at 38.20 below the 50-midline signals, the downtrend persists, but then a positive divergence forming in the daily chart means that the index might print a leg-up before resuming its downtrend.

The S&P 500 would need a break above 4276.58. In that event, the next resistance would be the 4300 mark. Breach of the latter would expose a three-month-old downslope trendline and March 3 daily high at 4416.78.

If that scenario plays out, due to the nature of the market mood, the US central bank tightening, heightened levels of inflation, and technical factors will resume the downtrend towards fresh YTD lows.