S&P500 (SPX) Price Analysis – Jan 05, 2024
Daily Price Outlook
The S&P 500 (SPX) continued its downward trend, extending its losing streak in the early days of 2024. As a benchmark for the broader U.S. stock market, the index lost 0.34%, closing at 4,688.68 points. This marks the worst start to a year since 2015, prompting concerns among investors who closely follow the January Barometer theory. According to this theory, the market's performance in January serves as a predictor for its trajectory throughout the rest of the year.
Investors kept a close eye on the job market, with a resilient labor report dampening expectations for early interest-rate cuts. The potential for Federal Reserve rate reductions had been a key factor driving the market's late 2023 gains, but the minutes from the December policy meeting did not offer clear indications regarding the timing of any easing.
Market Sentiment and Uncertainty Surrounding Interest Rates Amidst Strong Employment Data
According to the CME Group’s FedWatch tool, traders saw a 66.4% chance of at least a 25-basis point rate cut in March and a nearly 92% probability for May. However, a strong ADP National Employment report revealed that U.S. private employers hired more workers than anticipated in December, suggesting ongoing strength in the labor market.
Despite concerns about a softening job market, the official employment data, scheduled for release on Friday, remained uncertain. Peter Cardillo, Chief Market Economist at Spartan Capital Securities, noted that the recent market movement might be a technical adjustment following a significant rally.
The job market is important for investors. A report from ADP National Employment said that in December, private employers added 164,000 jobs, more than expected, showing the job market is still strong. But a weekly report from the Labor Department showed more Americans than expected filed for unemployment.
Hence, the uncertainty around interest rates and mixed economic signals have led to a technical adjustment in the market, contributing to a 0.34% decline in the S&P 500. The Nasdaq Composite (IXIC) also slipped 0.56%, while the Dow Jones Industrial Average (DJI) managed a slight gain of 0.03%.
S&P500 (SPX) - Technical Analysis
As of January 5th, the S&P 500 Index (SPX) reveals a subtle yet significant shift in market sentiment, closing at 4688.69, a decrease of 0.34%. The pivot point is identified at $4,614, marking a crucial level for potential directional shifts. Resistance levels at $4,703, $4,859, and $4,949 suggest hurdles for bullish momentum, while support levels at $4,456, $4,366, and $4,276 could prevent further declines.
The Relative Strength Index (RSI) at 53 indicates a neutral market mood, while the MACD at -14.13, significantly below the signal line of 54.30, implies potential for a downward trend. Additionally, the index's position near its 50-Day Exponential Moving Average (EMA) of $4,589 suggests a balanced market trend.
The absence of a clear chart pattern implies a cautious approach among investors. Overall, the market outlook for SPX appears neutral to slightly bearish. A sell limit strategy at 4697, with a take profit at 4636 and a stop loss at 4739, could be a prudent approach considering the current market conditions and technical indicators.
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