S&P500 erases losses
The S&P500 fell to its 50 moving average yesterday as investors were digesting news about rising inflation. However, it sapped back and erased loses and closed in the green by the end of the day. One of the reasons of the afternoon rally could be Fed chief Jerome Powell´s testimony before the Senate Banking Committee. He kept a dovish tone and tried to reassure investors that the US economy still needs some time to achieve employment and inflation goals. On the 4 hourly chart the index definitely needs to climb above the descending yellow trendline to prove that Powell convinced investors and the bulls are still in charge.
Breaking above the trendline might pave the way to challenge previous record high (C) and rise towards the psychologically important 4.000 level. Further decline, however, would be tested at previous low (A), which is sitting on the 50 moving average on the daily chart. Breaking below this low would mean that the bears could push the index to its January low around 3.660 (B).