Republic Risk: Rebounding from Oversold… But…

We're very close to reaching key technical levels for the S&P 500 - and gut instinct should carry concerns about a selloff again with the Fed's hawkish tone and China's basket case policies.

Equity Storm Watch Is RED on the S&P 500 and RED on the Russell 2000

Futures continue to rebound off oversold levels from last Friday during options expiration. It’s been a rather sizeable rebound, marked by the S&P 500 dropping to a 30 on the Relative Strength Index and near 20 on the Money Flow Index. We typically don’t get very bullish until after we see multiple days of rebounding, but we’re seeing improvements in the technical readings of all SPY oscillators. We’re still uncertain if this is a rebound or a bull trap, especially given the light volumes in this late-April bounce.

The Fed’s hawkish stance on interest rates has not faded, and geopolitical tensions are paused. The SPY is less than 1% from its 50-day moving average and 1.2% from its 20-day moving average. Failure to hold above those lines would likely dampen this rally. That said, all sectors are recovering - with real estate and utilities surprising.