Weekly Indices Review - 14 December

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On Tuesday the US CPI data came in just marginally under the forecasts of 7.3% and this allowed some initial buying interest to emerge, although this quite quickly eased as the post was only a slight beat and so much of the positive news had already been priced in.

Also we have the FOMC rate announcement today, so it was difficult to see how buying momentum could gain too much traction ahead of this key event.

As a result price action is looking a little more muted ahead of the Fed rate announcement this evening. But the moves higher intraday yesterday showed how buying interest does remain ready, just standing on the sidelines at the moment and that on future positive news they could reappear again.

Also the daily chart clearly show how the index has been in a negative trend for much of 2022. The spike higher yesterday was able to break this upper resistance, suggesting that technically the buying interest is ready to emerge.

The Fed may well attempt to cool the markets increasing optimism again as they remain concerned that inflation remains far from under complete control, but developments have shown in recent days that even a relatively neutral statement from the Fed could still allow some of this buying interest to re-start and allow the index to break the very clear medium term negative trend.

It is too early to call the end of the possible bear market rally, and some analysts remain concerned that we could yet stall and move back to the Autumns lows, but what is also clear is that buying interest under the right conditions has shown more resilience in recent days, and that calls for a more optimistic start to 2023 have increased.