The S&P 500 index opened near the all-time highs but has lost momentum as light trading pervaded the market two days before the FOMC rate decision. The S&P 500 index is down 0.3% as traders opt to stay more on the sidelines and watch what the Fed comes up with.
What was looking like an assured discussion on tapering following a sequence of data suggesting rising consumer inflation was tapered by the jobs report of May, which showed that the US economy added far fewer jobs than expected.
Net longs on the US Dollar are receding, which signifies that the US markets are betting more on the Fed holding its accommodative stance once more.
Technical Levels to Watch
The price continues to stay above 4220.63, which serves as immediate support. Short-term price action will depend on the FOMC decision on Wednesday.
Maintenance of the accommodative stance remains bullish for the S&P 500 index. This could lead to a bounce off the 4220 support, allowing for a retest of the all-time high at 4249. A break here could target the next resistance set by Credit Suisse at 4260, with 4300 also coming into the picture as an additional target to the north.
On the other hand, if the Fed starts to consider tapering in this meeting, this could be bearish for the S&P 500 index. We could then see a breakdown of the 4220 support, with 4176 and 4150 serving as immediate downside targets. Further targets to the south lie at 4120 and 4082.