Technical Analysis

S&P500 (SPX) Price Analysis – Jan 26, 2024

By LonghornFX Technical Analysis
Jan 26, 20244 min

Daily Price Outlook 

The global market sentiment has maintained its upward trend and gained some further traction, closing at an all-time high for the sixth consecutive day. The broad index rose by 0.53% to reach 4,894.16, setting another all-time closing record. This positive momentum is reflected in the Dow Jones Industrial Average, which added 242.74 points, or 0.64%, closing at 38,049.13. However, the Nasdaq Composite experienced a more modest increase of 0.18%, reaching 15,510.50, dampened by a post-earnings decline in Tesla shares.

However, the recent high performance of the S&P 500 is influenced by a mix of good economic news, worries about global events, and uncertainties about the world economy.

Positive U.S. Data and Federal Reserve Insights

However, the upward performance of the SPX can be attributed to recent positive data from the U.S., which has boosted market confidence. Gross Domestic Product (GDP) data for the fourth quarter exceeded expectations, showing a growth rate of 3.3%, well above the anticipated 2%. This robust economic performance is seen as a sign of resilience despite the Federal Reserve's interest rate hikes. The report also brought encouraging news on the inflation front, with the Personal Consumption Expenditures Price Index showing a quarterly gain of 2%, excluding food and energy.

Investors are closely monitoring the Federal Reserve's future policy decisions, especially regarding potential adjustments to interest rates. The market's response to positive economic indicators, coupled with concerns about geopolitical issues and a global economic slowdown, will likely shape the trajectory of the S&P 500 in the near term.

Therefore, the positive U.S. economic data, particularly the strong GDP growth and favorable inflation figures, have boosted market confidence. Investors are closely watching the Federal Reserve's decisions, and these indicators may influence the near-term direction of the S&P 500.

Geopolitical Concerns and Global Economic Slowdown

Despite the stock market doing well, concerns like the Israeli-Hamas conflict are making investors nervous. People worry it could turn into a bigger problem, affecting the global economy. Also, experts think the world economy might slow down in 2024, adding more uncertainty for investors. These external factors could influence the trajectory of the S&P 500 in the coming months.

Therefore, the geopolitical concerns, particularly the Israeli-Hamas conflict and anticipated global economic slowdown, are injecting uncertainty into the market. Investors' concern may impact the S&P 500's direction in the coming months.

S&P500 (SPX) Price Chart - Source: Tradingview
S&P500 (SPX) Price Chart - Source: Tradingview

S&P500 (SPX) - Trade Ideas

On January 26th, the S&P 500 index is marginally positive, with a slight gain of 0.05%, placing the current value at 4,894.17. The index's behavior suggests a hesitant optimism as market participants digest a slew of economic reports and earnings results. The pivot point, a key gauge of market sentiment, is fixed at $4,799.93, with the S&P 500 trading above this level, indicating short-term bullishness.

The index faces immediate resistance at $4,882.20. A breach of this level could see the S&P 500 testing further resistances at $4,923.34 and potentially at $5,009.94. These levels are poised to challenge the index's upward momentum. Conversely, support levels are established at $4,756.63, with additional floors at $4,670.02 and $4,626.72, which may provide a safety net against any downward correction.

The Relative Strength Index (RSI) stands at 70, bordering on overbought territory, which may signal a need for caution among buyers. The MACD value at 7.69, although currently below its signal line at 37.35, indicates that while the momentum has been positive, there might be a slowdown as the two lines converge.

The 50-day Exponential Moving Average (EMA) is calculated at $4,860.71, offering a benchmark for the index's medium-term trend.

The overall trend of the S&P 500 appears to be cautiously bullish. For traders considering entry points, a buy limit order at 4,870 could be strategic, with a take profit goal at 4,930 and a stop loss set at 4,840 to manage risks. The near-term forecast suggests the S&P 500 may continue to challenge its immediate resistances, but with indicators nearing overbought conditions, a pullback should not be discounted.

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