Technical Analysis

S&P500 (SPX) Price Analysis – Feb 09, 2024

By LonghornFX Technical Analysis
Feb 9, 20243 min

Daily Price Outlook 

The global market sentiment maintained its upward trend and is still flashing green on the day. This can be witnessed by the strong performance of the S&P 500 index, which crossed a significant milestone as it surged the historic 5,000 mark. However, this upward trend underscores the strength of the market, driven by several factors including a robust earnings season, easing inflation data, and a resilient economy. Despite facing challenges, the S&P 500 has managed to climb steadily, reflecting investors' confidence in the market's long-term prospects.

Federal Reserve's Impact on S&P 500 Trajectory

The Federal Reserve, the central bank of the United States, has a major impact on the S&P 500 and other financial markets. Recently, top Fed officials like Jerome Powell and Thomas Barkin have been careful about making changes to interest rates, even though the economy is doing well. Powell has been saying that they need to be cautious and won't be cutting rates right away. This has made investors less worried and caused bond yields to go up, like the 10-year Treasury yield hitting a two-week high of 4.169%. Investors closely follow the Fed's statements because they can influence market sentiment and perceptions of the value of stocks in the S&P 500.

Geopolitical Concerns Impacting Stock Market Stability

The global stock market is doing really well, but there are some worries about conflicts happening between Israel and Hamas. The recent conflict between Israel and Hamas has raised concerns about the humanitarian situation and regional stability. The US has cautioned Israel against making significant military actions without careful planning. Such geopolitical tensions can unsettle the market as investors become nervous.

SP500 (SPX) Price Chart - Source: Tradingview
SP500 (SPX) Price Chart - Source: Tradingview

S&P500 (SPX) - Technical Analysis

The S&P 500 Index continues to flirt with the precipice of bullish momentum, evidenced by a modest uptick of 0.06%, placing the market valuation at $4,997.92. A closer examination of the four-hour chart reveals a pivot point at $4,926.25, a crucial fulcrum around which trading strategies might pivot.

Immediate resistance presents itself at $5,005.83, challenging traders to break through to confirm continued bullish intent. Further resistance benchmarks are found at $5,053.58 and an ambitious $5,137.14, levels that may either cap the rally or, if surpassed, signal a new leg of bullish fervor.

Conversely, the support mechanism activates at $4,878.50, with additional safety nets at $4,794.95 and $4,747.20, which stand ready to absorb any bearish blows.

The Relative Strength Index (RSI), currently at a relatively high 70, suggests that the market is approaching overbought territory, yet there is no immediate indication of a reversal. The MACD's current value at 3.41, versus its signal at 41.06, presents a mixed narrative, hinting at a potential plateau in momentum.

The 50-day Exponential Moving Average (EMA) precisely aligns with the current market price at $4,997.92, reinforcing the index's strength at these levels.

A notable chart pattern is the index's closure above the significant $4,985 level. This development near the all-time high underscores the market's robust appetite for risk and sets the stage for potential acquisition trends.

In summary, the S&P 500's technical outlook suggests a strong buy signal above the $4,986 mark, targeting profits at $5,040 with a safety net stop loss placed at $4,950. This bullish outlook is predicated on the market maintaining its current trajectory and breaking past immediate resistance levels with conviction.

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