SP500 Analysis

Introduction

Retrosective market report of US equity indexes, focusing on SP500, DJIA, Nasdaq100 and
Russell2000. Will also briefly touch on related markets (fixed income, FX) and monetary policy.

No financial advice given or intended.

High Level Overview

Daily Chart:

5m Chart:

Friday 01 Feb

The session started with the DJIA the strongest index and Nasdaq the weakest index. Yesterday saw
technology leading financials (FAANG up 2% with SP500 -0.2%), today saw the opposite (FAANG
down -2% with SP500 +0.2%). Later in the day Russell2000 smallcaps, eclisped the DJIA bigcaps
early lead.

Wednesday's FOMC statement confirmed fed funds to remain unchanged, while QT could be
reduced. Powell also hinted at other monetary policy measures such as further reductions in QT, and
even a resumption of QE should conditions require.
The USD, rates (and the yield curve) responded accordingly. We would expect rates to remain
suppressed which while positive for equities is negative financials. Conversely technology could
likely benefit.

The main economic reports for Friday were NFP and ISM PMI. Both beat. NFP likely increased by
the rise in temporary jobs as a result of the recent US government shutdown. PMI heavily beat
forecasts and markets reacted with an immediate surge in buying. However gains were not fully
held through the session.

The session ended with a surge in buying possibly due to month-start mututal fund allocations. All-
in-all the day was mostly range-bound, with a smaller daily range.

Participants remain split in views between a continuation of this rally in equities, and a re-test of the
December 2018 lows.

- End. -