S&P500 (SPX) Price Analysis – Dec 13, 2024
Daily Price Outlook
The S&P 500 has been facing some bearish pressure, dropping around 6,051 level, despite a positive economic outlook in the U.S. However, the major factor contributing to the decline is the escalating geopolitical tensions in the Middle East.
This uncertainty has raised concerns about global stability, leading to safe-haven demand, particularly for precious metals like gold. In the meantime, the recent Israeli strike, which resulted in numerous casualties in Gaza, has only intensified these concerns, spurring more cautious sentiment in the equity markets.
At the same time, the U.S. dollar has been benefiting from its role as a global safe-haven asset. The US dollar's strength is providing some support to U.S. equities, limiting further declines in the S&P 500.
Whereas, the Producer Price Index (PPI) was slightly higher than expected, the overall economic picture, including the PCE report, still points to inflation cooling in key areas. This suggests the Federal Reserve may not be as aggressive with rate hikes, which could also help mitigate the bearish sentiment in the stock market.
Geopolitical Risks and Their Impact on the S&P 500 Index
On the geopolitical front, the ongoing geopolitical tensions, particularly in the Middle East, have also played a major role in the recent struggles of the S&P 500.
The ongoing conflict in Gaza, with Israeli airstrikes causing significant casualties, has escalated concerns about the broader implications of instability in the region.
Investors often seek safe-haven assets like gold or U.S. Treasuries during periods of geopolitical turmoil, and such events can lead to increased volatility in equity markets.
For the S&P 500, the rise in geopolitical risks often results in risk-off behavior from investors, leading to a sell-off in stocks.
The uncertainty surrounding the situation in the Middle East adds to the already fragile sentiment caused by inflationary concerns and rising interest rates.
In times of such instability, equity markets like the S&P 500 tend to underperform as investors shift towards safer, more stable assets. This heightened uncertainty further exacerbates the pressure on the index, contributing to its overall bearish trend in the current market environment.
S&P 500 – Technical Analysis
The SPX500 trades at 6,051.25, down 0.54% on the 4-hour chart, reflecting cautious market sentiment. Prices hover near the pivot point at 6,053.16, which acts as a critical level for maintaining stability.
Immediate resistance is seen at 6,093.09, followed by 6,127.09 and 6,165.62. On the downside, immediate support lies at 6,028.71, with additional levels at 5,984.87 and 5,950.90, offering safety nets for bearish pressure.
The 50 EMA at 6,048.99 aligns closely with current levels, suggesting the index is testing short-term equilibrium.
The Relative Strength Index (RSI) at 45 highlights neutral momentum, tilting slightly bearish, which could limit significant upside unless buying interest revives.
A Buy Limit entry at 6,028 targets 6,092, with a Stop Loss at 5,990 to manage downside risks. A break above 6,093.09 would signal renewed bullish momentum, paving the way for higher targets, while failure to hold the pivot point could prompt a decline toward 5,984.87.
Traders should monitor global risk sentiment and economic data releases, as they are likely to influence near-term trends.
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