Breaking Through the Mean: How the Market Surged Higher


Simpler Trading Team

Mar 21st 2023  .  3 min read

Breaking Through the Mean: How the Market Surged Higher

During the post-market trading session, the S&P 500 futures remained steady above the support zone established by the 21-day Exponential Moving Average (EMA) at 3,983. The market’s sustained position above this level strengthened the plausibility of an upward trajectory. Gradually, the indices began to ascend from this point and displayed resilience throughout the night. As dawn approached, a consistent influx of purchasing activity propelled the market upwards in anticipation of the opening bell.

Early Resistance Found at Key Moving Average

At the opening bell, the S&P 500 futures encountered a resistance barrier at the 50-day Simple Moving Average. At this level, the selling pressure was significant enough to stall the upward momentum that had been building up until then. Following a minor initial dip, another attempt was made to breach the 50-day SMA, resulting in a double top formation when it failed. This led to one of the most substantial downward movements, bringing the market closer to the psychological 4,000 level.

Throughout the remainder of the cash session, the indices exhibited volatility, leading to smaller fluctuations within a narrow range. The range of 4,000 to 4,020 on the S&P 500 futures was eventually broken during the power hour. In the final hour of the trading session, the indices managed to break through previous resistance levels and achieved new highs for the day.

Technology Sector Continues to Surge

The Nasdaq futures index continues to exhibit the strongest performance, with the technology sector experiencing a recent surge. While the possibility of a shift in momentum and the Dow Jones leading the upward trend in the coming days exists, it is more likely to come from the Nasdaq. For the market’s upward trajectory to persist, it would prefer to witness continued growth from technology leaders such as Apple Inc. (AAPL), Amazon Inc. (AMZN), and Tesla Motors Inc. (TSLA).

However, if the technology sector loses momentum and money does not rotate into the Dow Jones, a downward movement may ensue. These are crucial indicators to observe while navigating the volatility in anticipation of tomorrow’s pivotal catalyst. Additionally, it is crucial to remain impartial heading into tomorrow as the market has already factored in various potential outcomes of the Federal Reserve’s rate hike decision. Currently, the market appears uncertain about what the future holds, and any reaction can occur before the end of the week.

What to Watch for Tomorrow 

The Federal Reserve (Fed) is scheduled to announce its interest rate decision tomorrow at 2 p.m. Eastern, followed by a press conference at 2:30 p.m. Eastern where Fed Chairman Jerome Powell will provide further insight into the decision.

Market speculation surrounding the announcement has varied, with potential rate hikes ranging from 0 to 50 Basis Points (Bps). Regardless of the decision, it is likely to trigger a significant market response that can carry over into several trading sessions. If the Fed decides to halt rate hikes, the market would probably respond positively, leading to an upward trend. However, an adverse reaction is expected if the Fed chooses to hike rates by 50 basis points. It becomes challenging to predict the outcome if the decision is 25 basis points, and Powell’s statements will likely influence the market.

Market Continues to be Green into Big Decision

The Nasdaq and the S&P 500 were Positive to close the session. The S&P 500 futures closed up 1.39%, adding 55 points, while the Nasdaq futures closed up 01.48%, gaining 188 points. The Dow Jones futures followed, closing up 1.01%, an increase of 330 points.