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  • Weekly Summary: Oil is going Sky-High, S&P 500 is Ready for a Rebound

Weekly Summary: Oil is going Sky-High, S&P 500 is Ready for a Rebound

The U.S. stock market survived as the S&P 500 broad market index refrained from going down to 3550-3650 points. In the second half of the week the index signalled buy opportunities and rose to 4075 points.

It is interesting to note that no positive drivers pushed the index up. On the contrary, the second Q1 2022 estimate for GDP was even lower than the first one, it declined by 1.5% vs 1.4% initially calculated. The Federal Open Market Committee’s (FOMC) minutes signalled further Federal Reserve (Fed) interest rate rises to tame inflation to the targeted 2%. This hike cycle could only be stopped in the case of a sharp recession.

PMI readings in the Eurozone, the U.K and the U.S. this week registered another significant decline, especially in the services sector. Inflation is slowing down reluctantly and may surprise us in the coming months if Brent crude prices surge to $160-180 per barrel in June.

So, we may have a stock market rebound this summer, but it will probably be of a high speculative nature. The S&P 500 index entered an upside pattern with the target at 4200-4300 points. Good entry points for opening long positions are located at the 3960-3980 area. However, this would be a countertrend operation, bearing a high risk.

Brent crude prices broke through the resistance at$115 per barrel without a European ban on Russia’s oil. This breakthrough triggered the extreme upside scenario of Brent crude at $160-180 per barrel.

Gold prices are still looking for the upside. But they failed to perform a significant rise from the $1840 per troy ounce support level despite a weakening U.S Dollar. So, an upside spike to the targets at $1940 per ounce or $2000 is highly unlikely. Traders should be prepared for a possible downside later in June.

The greenback continues to lose strength. EURUSD continues to move towards the upside and has met the primary target of 1.07000-1.08000. Now it is better to wait for a correction or an aggressive climb above 1.08000. Only then may good entry points appear.

GBPUSD has also met its primary targets at 1.26000-1.27000. So, it is better to wait for the next move of the pair to make justified decisions.