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Summary: In Thursday's trading, most stock markets experienced gains, adding to the recent upward momentum. With the Nasdaq Composite and S&P 500 reaching new closing highs, they have once again achieved their best levels in over a year.

Fundamentals

The three major US stock indices retreated slightly at the close but remained in positive territory. The Nasdaq Composite rose 219.61 points, or 1.6%, to 14,138.57; the S&P 500 gained 37.88 points, or 0.9%, to 4,510.04; and the Dow Jones Industrial Average (DJIA) edged up 47.71 points, or 0.1%, to 34,395.13.

The U.S. Department of Labor reported that producer prices in June increased slightly less than expected, contributing to the continued strength in the three major stock markets.

According to the Labor Department, the final demand Producer Price Index (PPI) rose modestly by 0.1% in June after a revised 0.4% decrease in May. The market had previously anticipated a 0.2% increase in producer prices, while last month's initial report indicated a 0.3% decline.

The report also indicated that the year-on-year growth rate of producer prices slowed from a revised 0.9% in May to 0.1% in June. The expected pace of growth is projected to decelerate from last month's initial report of 1.1% to 0.4%.

Following the lower-than-expected consumer price inflation data released on Wednesday, this data further alleviates concerns about the outlook for interest rates.

With both CPI and PPI data coming in below expectations, the argument for deflation holds true. While inflation is indeed declining across the board, there is still a possibility of the Fed raising interest rates again at the end of this month, but the likelihood of a rate hike in September is low.

Meanwhile, in an unexpected twist, another report from the Labor Department showed a slight decrease in initial jobless claims for the week ending July 8. The Labor Department stated that initial jobless claims declined to 237,000, a decrease of 12,000 from the revised 249,000 in the previous week. This drop surprised the market, as expectations were for initial jobless claims to rise slightly from the initial report of 248,000 to 250,000.

The U.S. stock market has seen a strong rebound this week, with signs of cooling inflation increasing speculation that the Fed will soon end its rate hikes, boosting technology stocks. However, as the risk of sticky inflation and a hawkish central bank policy looms over the market in the second half of this year, the timing for institutional investors to short the U.S. stock market has matured. This is because risk assets are currently in a "Goldilocks economy" state and may face higher consumer price inflation and policy tightening in the second half of the year.

Technical Analysis

The DJIA showed further upward movement in the futures market on Friday and tested the previous high of 33,576, forming a "triple top" pattern. However, it is challenging to generate investor follow-through with such a pattern. This suggests that the market will enter a wait-and-see mode.

Currently, the DJIA exhibits a bullish momentum. The price may continue to rebound from the first support level at 34,474 and move towards the first resistance level at 33,576.

The second support level at 34,290 is considered a strong support as it represents a retracement support. The third support level at 34,036 is an overlapping support level, also receiving support from the 61.80% Fibonacci retracement.

The first resistance level at 34,616 is seen as a significant barrier. The second resistance level at 34,715 should be closely monitored due to the presence of the 127.20% Fibonacci extension.

Overall, it is not advisable to chase long positions as the market has formed a "triple top" structural pattern. Trading is based on the path of least risk.

Overall, due to the formation of a "triple top" pattern in the market, it is not advisable to chase long positions. Trading should prioritize the path with the least risk.

Trading Recommendations

Trading Direction: Short

Entry Price: 33576

Target Price: 33600

Stop Loss: 35200

Valid Until: 2023-07-28 23:55:00

Support: 34474, 34290, 34036

Resistance: 34616, 34715, 35050