Technical Analysis

S&P500 (SPX) Price Analysis – April 12, 2024

By LonghornFX Technical Analysis
Apr 12, 20243 min

Daily Price Outlook

The S&P 500 index has maintained its upward trend and is still showing gains for the day. This positive trend is mainly driven by several key factors including the positive economic data, which indicating a strong and growing economy. Despite initial concerns about inflation, the latest reports on producer prices suggest a controlled and manageable increase, easing fears of excessive tightening measures by central banks. This stability has boosted investor sentiment, leading to increased interest in buying equities, including those listed on the S&P 500.

Moreover, corporate earnings have exceeded expectations, with many companies reporting strong financial performance and strong outlooks. The positive corporate earnings exceeding expectations have contributed to the S&P 500's upward trend and increased investor confidence.

Impact of US Producer Prices Index (PPI) Rise on S&P 500

On the data front, the recent rise in the US Producer Prices Index (PPI) has gained attention from market investors, sparking discussions about its potential impact on the S&P 500 index. Whereas, the increase in producer prices could raise concerns about inflationary pressures and future monetary policy adjustments, the market reaction has been relatively subdued.

Investors have seen the PPI rise as a sign of recovering demand and supply chain dynamics rather than runaway inflation. This positive view has helped the S&P 500 keep going up, as investors feel more confident about the economy growing steadily and prices staying stable. Because of this, more money is coming into the index from investors who believe in a good market environment, even if there are some ups and downs in economic data.

Heightened Tensions in the Middle East and Its Impact on S&P 500 Index

On the geopolitical front, the recent tensions in the Middle East following potential retaliatory actions, have added uncertainty in the market as concerns about geopolitical risks and their potential impact on global economic stability have led to cautious investor sentiment.

It should be noted that Israel is attacking areas like Gaza and the West Bank. They bombed a refugee camp in Gaza and had a raid in the West Bank that resulted in the deaths of at least two Palestinians. Since October 7, over 33,000 Palestinians were killed and 76,000 injured in Israeli attacks on Gaza.

SPX Price Chart - Source: Tradingview
SPX Price Chart - Source: Tradingview

S&P500 (SPX) - Technical Analysis

In today's market analysis, our focus is on the S&P 500 index, which has exhibited a notable uptick of 0.74%, positioning itself at $5199.05. Central to our assessment are the critical price junctures that demand close scrutiny from investors. The pivot point, located at $5204.58, serves as a pivotal axis around which market sentiments pivot. Advancing upwards, immediate resistance levels stand firm at $5263.83, with subsequent hurdles at $5323.08 and $5379.96, charting the index's potential upward trajectory. Conversely, downside protection is afforded by immediate support at $5147.70, followed by $5088.45 and $5026.83, offering stability amidst potential downturns.

Turning our attention to the technical indicators, the Relative Strength Index (RSI) currently rests at 50, suggesting a neutral stance in market momentum, poised for potential shifts in either direction. Meanwhile, the 50-Day Exponential Moving Average (EMA) maintains a steady position at 2365, providing a reference point for the prevailing market trend.

In conclusion, our analysis underscores a nuanced strategy for investors engaging with the S&P 500 index. An entry point is suggested below $5210, with a strategic take-profit target set at $5150. To mitigate downside risks, a disciplined stop-loss strategy at $5245 is recommended, ensuring prudent risk management in the face of market uncertainties.

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