Penultimate Trading Session Brings Rally

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Joseph Rangel

Dec 29th 2022  .  4 min read

During the overnight trading session, the major indices maintained a significant level of support as the S&P 500 held the psychological level of 3,800. This level has played a pivotal role in supporting the market in recent weeks. As the cash session closed yesterday, it left the market in a state of uncertainty. However, the market’s ability to hold its ground during the overnight session was a positive indication for the upcoming cash session. “

The market’s ability to hold its ground at the key support level of 3,800 was not the only factor driving its upward momentum today. Before the start of the cash session, the Initial and Continuing Jobless Claims report was released, showing 225,000 claims, slightly higher than the anticipated 223,000. While this may seem like negative news at first glance, it actually indicates that the tight labor market is finding some relief. This is the first time in several weeks that either of these reports has shown declining job market numbers, which bodes well for the overall economy. 

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Futures with David Starr

Market shows signs of life

When the opening bell sounded, a large buying volume flooded the market. An influx of pressure led to the market exploding higher during the opening drive. It has been rare in recent weeks to see this action, so this became another early confirmation that the buying was not a trap this time. 

The market saw a strong start as it rose over 40 points during the opening push, offering a hopeful outlook. While the momentum slowed as the day progressed, and the market traded in a narrow range until the end of the day, it was one of the few times that the upward movement was not immediately sold off. This showed a shift in market sentiment and could potentially signal more positive price action in the future.

The lack of immediate selling pressure was a notable deviation from the norm and suggested that there may be more room for the market to grow before the end of the year. As the market closed, the S&P 500 sat at a pivotal level with potential targets for both bullish and bearish traders to consider as the year comes to a close. 

Levels to watch on the last trading day of the year

On the upside, the 50-day and 15-day simple moving averages (SMA) and the 21-day exponential moving average (EMA) need to be noted. The 15-day SMA is at 3,910, and the 50-day SMA and 21-day EMA overlap at 3,907. Before reaching those moving averages, the psychological level of 3,900 will come first. 

On the upside, these levels could serve as targets for the market and where heavy resistance may be encountered due to the close proximity of these key moving averages heading into the new year.

On the downside, the most significant target remains the psychological level of 3,800 on the S&P 500 futures. This level not only serves as a potential target, but also plays a significant role in determining the market’s next major movement.

As of now, it is uncertain whether the 3,800 level will mark the beginning of a new upward trend or simply a temporary bounce heading into the new year.

With tomorrow being the final trading session of the year, Simpler Trading wishes you a successful end to 2022 and a happy new year.

The market bounces and closes green

The Nasdaq and the S&P 500 were positive to close the session. The S&P 500 futures closed up 1.72%, gaining 65 points, while the Nasdaq futures closed up 2.45%, an increase of 236 points. The Dow Jones futures followed, closing up 1.00%, adding 329 points.