CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open Account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open Account
✖

S&P500 is the short squeeze over already?

By :   Global author , Financial Analyst
May 31, 2022 10:22 AM

Despite data from China today that showed the Omicron outbreak appears under control and that Chinese economic data may have bottomed, it's been a disappointing day for U.S equity futures, giving back all of yesterday's gains and more.

Behind today's sell-off, events over the past 24 hours have combined to dent hopes that peak inflation and peak Federal Reserve hawkishness might be in the rear vision mirror.

The events have included a red-hot German inflation print and hawkish comments from Federal Reserve Governor Waller, who stated, "In particular, I am not taking 50 basis-point hikes off the table until I see inflation coming down closer to our 2% target."

Throwing fuel on a smouldering bond market bonfire, the price of crude oil has rallied above $119 per barrel, its highest level in almost three months following the EU agreeing to ban Russian seaborne oil imports just as the driving season in the U.S kicks off and a broader re-opening commences in China.

While these events have provided a setback or a speedbump to our view that a short-covering rally towards 4300 is underway, we don't see them as being the catalyst for a sustained reversal lower. Short-covering rallies don't usually end until the crowd gives up on the bearish view and turns bullish.

Turning to the charts. As viewed on the 60-minute chart below, the rally from the 3807.5 low appears to be missing another leg higher above the overnight 4202.25 high towards 4250/4300.

Providing the current pullback holds support near 4100 we continue to call for higher prices before the current short-covering rally has run its course.

 

  1. Open a Forex.com account, or log in if you’re already a customer.
  2. Search for the pair you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels.
  4. Place the trade.

StoneX Financial Ltd (trading as "FOREX.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, FOREX.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date.


This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it. No opinion given in this material constitutes a recommendation by FOREX.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.


The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although FOREX.com is not specifically prevented from dealing before providing this material, FOREX.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. For further details see our full non-independent research disclaimer and quarterly summary.


CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Financial Ltd. StoneX Financial Ltd is a company incorporated in England and Wales with UK Companies House number 05616586 and with its registered office at 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is authorised and regulated by the Financial Conduct Authority in the UK, with FCA Register Number: 446717.

FOREX.com is a trademark of StoneX Financial Ltd. This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy. FOREX.com products and services are not intended for Belgium residents.

© FOREX.COM 2026