Equities Watchlist: Is fifth Time the Charm for the S&P 500 Index?

The S&P 500 Index is testing a verrry closely-watched technical resistance!

Uncle Sam’s S&P 500 stock index (SPX) began the 12 months on a robust note, rising from a consolidation near 3,800 to trade closer to the 4,000 psychological zone.

What makes the chart more interesting this week is that it’s trading juuuuust above the 200 SMA on the each day time-frame. That hasn’t happened consistently since April 2022!

More importantly, traders all over the world consider the 200 SMA to be a bellwether. Stocks (or indices) trading above the 200 SMA are believed to be in a bull cycle, while assets trading below the moving average are in a bear cycle.

S&P 500 Index (SPX500) Each day Chart by TradingView

This time around, the 50 SMA can also be as near the 200 SMA because it had ever been because the bearish crossover back in March. The 50 SMA crossing above the 200 SMA would only help the bullish cycle narrative.

With SPX testing the 200 SMA for a FIFTH time in months AND markets trading a risk-friendly trading environment, many want to see if the retest will herald a longer-term bullish run.

Before you purchase U.S. stocks like there’s no tomorrow, though, it’s best to note that SPX can also be testing a key trend line resistance that’s been solid since January 2022.

Stochastic can also be on the bears’ side with an overbought signal though the oscillator hasn’t turned lower just yet.

Watch the following candlesticks to see if SPX can sustain its prices above the 200 SMA!

The U.S. will likely be printing its producer prices and retail sales numbers, which could help gauge how hawkish the Fed will likely be in its next meetings.

If traders price in additional tightening from the Fed, or if this week’s earnings reports highlight recession fears, then SPX could get rejected on the 200 SMA and drop back to its December levels. It could even extend its downtrend!

But when markets proceed to cost in China’s reopening theme, or if traders proceed to be bullish about major central banks slowing down their tightening plans, then we could see SPX break above the important thing technical levels that we’re watching.

SPX could jump to the 4,100 or 4,200 zones before seeing sustained bearish pressure!

This content is strictly for informational purposes only and doesn’t constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to be certain you understand the risks involved.

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