The Squeeze Higher in US Equity Indices: A Technical and Economic Analysis

In recent days, U.S. equity indices have shown signs of recovery, particularly after a strong technical correction. Despite a less favorable fundamental backdrop, marked by ongoing inflationary pressures and growing expectations of tighter monetary policy from the Federal Reserve (Fed), investors appear to have found support at key technical levels during the recent decline. For instance, the S&P 500 is testing its 100-hour moving average, a level that could be pivotal for sustaining the rebound and regaining control by buyers. If this level holds, the index could push higher towards new record highs. However, if it fails to surpass both the 100-hour and more critical 200-hour moving averages, the upward trend may weaken, allowing sellers to regain dominance. The current scenario reflects a delicate balance between fundamental and technical forces shaping the behavior of the American market, with the Fed continuing to closely monitor the situation.