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S&P 500 Value Outlook: Bullish Fatigue Permits Second of Reflection


S&P 500 Evaluation

  • Is dangerous information excellent news once more? Sentiment seems to have shifted
  • A dovish notion of the current FOMC assembly buoyed threat property as fee cuts shift nearer
  • Longer-term development could also be in danger however a lot of key technical ranges seem within the interim
  • The evaluation on this article makes use of chart patterns and key help and resistance ranges. For extra data go to our complete schooling library

Is Good Information Dangerous Information Once more? Sentiment Has Shifted

U.S. fairness markets have surged within the final week on the again of market expectations which suggests the Fed has reached a peak in US rates of interest. Whereas the Fed didn’t explicitly state as a lot, this was the notion after final week’s FOMC assembly the place the committee acknowledged robust financial efficiency within the U.S. and on the identical time highlighted elevated US yields for its position in additional tightening the already restrictive monetary situations.

Markets selectively regarded previous current sizzling financial information and the way which will impression inflation and selected to concentrate on the position performed by elevated U.S. yields. This was largely seen as an indication from the Fed that extra rate of interest hikes seem extremely unlikely, ensuing within the bond market decreasing the probabilities of one other hike and bringing ahead the date of the potential first fee reduce in 2024.

This brings about an attention-grabbing dynamic so far as market sentiment is worried because the Fed has been calling for a interval of under development development and softer jobs information for a while now. The current softening of U.S. information has propelled threat property larger, advancing the logic that if the US is to expertise additional information deterioration, we may see additional fairness positive factors. Enter the ‘dangerous information is nice information’ state of affairs.

Taking a look at market sentiment by way of the CNN worry and greed index there was a transfer in the direction of impartial however because it stands the indicator nonetheless holds on to the ‘worry’ tag.

CNN Worry and Greed Index


Supply: TradingView, ready by Richard Snow

The every day chart reveals a doji candle yesterday which itself adopted on from a every day candle exhibiting an extended higher wick – suggesting a cooling of bullish momentum. within the absence of a concerted pushback from Fed officers, the index may very effectively proceed to rise and take a look at the current swing excessive round 4387, with the following degree of curiosity that 4450. There may be additionally a notable drop off relating to excessive significance financial information this week, that means there might be little resistance to the current upward momentum.

Sometimes such a bullish transfer could be seen as a pullback inside the long term downward development, nevertheless, a possible shift in market sentiment may invalidate the present downward development notably if we begin to see larger highs and better lows from right here on out. The crimson rectangles symbolize a decline of roughly 6% the place we had beforehand witnessed an inclination for the S&P 500 to supply a counter development transfer. Assist resides at 4325.

S&P 500 Every day Chart


Supply: TradingView, ready by Richard Snow

The weekly chart places the transfer into perspective as that is the most important transfer to the upside since November 2022. As well as, a key degree of resistance at 4325 has been breached – the extent has beforehand acted as a degree of help, now resistance.

S&P 500 Weekly Chart


Supply: TradingView, ready by Richard Snow

— Written by Richard Snow for

Contact and comply with Richard on Twitter: @RichardSnowFX

DailyFX supplies foreign exchange information and technical evaluation on the tendencies that affect the worldwide forex markets.

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