S&P500 (SPX) Price Analysis – July 19, 2024
Daily Price Outlook
The S&P 500 index continues its bearish trend, settling around 5,544.59 after a significant decline in recent sessions. This downward movement is primarily due to a shift away from high-growth technology stocks.
Investors are capitalizing on profits from technology shares that have recently surged, reallocating their funds into sectors expected to benefit from anticipated reductions in borrowing costs.
Despite a positive shift towards small-cap and cyclical stocks, broader market sentiment has turned negative. The trend of profit-taking has extended beyond technology, affecting nearly all sectors within the S&P 500.
This widespread sell-off has contributed to a further decline in the index, reflecting a broad-based market retreat.
Economic Data and Fed Rate Cut Speculation Impact on S&P 500
On the US front, the previously released economic data and speculation about Federal Reserve rate cuts have significantly influenced market sentiment.
Recent inflation data, including a slowdown in both annual headline and core Consumer Price Index (CPI) figures, has fueled expectations for interest rate cuts starting in September.
Meanwhile, the rise in the Unemployment Rate and more people filing for unemployment benefits has added to the negative mood in the market.
The S&P 500 is reflecting this uncertainty, as investors are unsure whether lower borrowing costs will benefit them, given that economic data might not match what the Federal Reserve hopes for.
The recent drop in the index shows that investors are being careful due to conflicting economic signals and uncertainty about possible future rate cuts.
Geopolitical Uncertainty and Humanitarian Crisis Impact on S&P 500 Index
Geopolitical tensions and humanitarian crises have added more pressure in the S&P 500's performance. Recent escalations in the Middle East, particularly Israel’s intensified strikes on Gaza, have exacerbated regional instability and raised concerns about broader conflicts.
Additionally, doubts about the US's commitment to Taiwan and ongoing geopolitical strife contribute to market uncertainties. The humanitarian crisis in Gaza, coupled with criticism from international actors and the potential for further conflict, has created a volatile environment.
These geopolitical concerns, combined with uncertainties about the US Presidential elections and a strong US Dollar, have pressured the S&P 500. Investors seeking safe-haven assets may shift their focus, influencing market sentiment and contributing to the index's downward trend.
S&P 500 - Technical Analysis
The S&P 500 is currently trading at $5,544.58, marking a decline of 0.78%. The 4-hour chart highlights critical levels for investors to monitor. The pivot point is set at $5,522.66, serving as a key indicator of potential price movements.
Immediate resistance is noted at $5,576.48, with further resistance levels at $5,607.64 and $5,643.05. On the downside, immediate support is identified at $5,490.08, followed by $5,446.88 and $5,405.81.
Technical indicators suggest a cautious market sentiment. The Relative Strength Index (RSI) stands at 45, indicating neither overbought nor oversold conditions, suggesting room for movement in either direction.
The 50-day Exponential Moving Average (EMA) is positioned at $5,517.33, providing a potential support level that could be crucial in the near term.
Given the technical setup, traders might consider placing a buy limit order at $5,520, just below the pivot point, to capitalize on potential upward momentum.
The suggested trade setup includes an entry price at $5,520, a take profit target at $5,575, and a stop loss at $5,490. This strategy aims to leverage a rebound while maintaining a controlled risk profile.
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