The Fed maintained rates and the markets remained relatively subdued even during the Powell press conference. This is evident in the S&P 500's 9-Day VIX chart, which only reached a high of 18.57, unlike Monday’s spike, which was triggered by the sharp pullback in the tech sector following the announcement of Deepseek, China’s own AI version that poses a direct challenge to OpenAI’s ChatGPT.
In many ways, the FOMC was overshadowed by the earnings from Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), and Tesla (NASDAQ:TSLA), as market participants were more interested in assessing whether the longer-term rally in the SPX would resume and if the index would retest the ATH, thereby invalidating the double top pattern I mentioned in an earlier post.
The earnings were also a mixed bag. Microsoft suffered the most significant decline of the three (down 6%) due to missed earnings for its Intelligent Cloud business despite posting much better-than-expected overall revenue and a higher EPS. In contrast, Tesla’s results came in below expectations, leading to a drop in stock price; however, it recovered on strong buying, clearly visible on the hourly chart. Meanwhile, positive results for Meta led to the stock moving within a $57 range in the first ten minutes.
S&P 500: Can We Escape the Double-Top?
Returning to the SPX and today’s price action, we can see on the daily chart that the index has moved higher, with another candle looking to form featuring a lower wick. However, the volume (so far) does not appear particularly encouraging, although the market has not yet closed, so this may change.
What is clear is that the index is seeking to regain the ATH at $6128 and invalidate the double top. Note – since writing this – the index has closed higher & an up-to-date assessment of the index is detailed on the chart above.
As always, it’s a good idea to look at the VIX (which moves inversely to the SPX) and here the hourly chart is perhaps the most interesting where the current price action is sitting on strong support. A break would give the SPX some upside momentum, while a hold could still see a move higher, but it will be a grind.