S&P500 (SPX) Price Analysis – July 25, 2023

Daily Price Outlook

In the last 24 hours, the S&P 500 index experienced a notable surge of 0.4%, primarily fueled by a rally in energy stocks and overall positive market sentiment. The increase was further supported by better-than-expected quarterly results from major tech companies and anticipation surrounding the Federal Reserve's imminent decision.

Energy stocks led the gains, with companies like Halliburton, Occidental Petroleum, and Chevron posting notable increases. Chevron's record quarterly production in the Permian Basin contributed to the positive sentiment, as it confirmed improved well performance and projects remaining on track, according to UBS.

Regional banks also saw a rally, boosted by stabilizing deposit data from companies like KeyCorp, Huntington Bancshares, and Citizens Financial Group, which instilled confidence in the financial sector.

Investors are eagerly awaiting earnings reports from tech giants such as Alphabet and Microsoft, scheduled for Tuesday, followed by Meta on Wednesday and Amazon on Thursday. Positive themes in the tech sector, including strength in cloud services, AI monetization, and stabilization in digital advertising, have set an optimistic tone for tech stocks ahead of the earnings season.

The Federal Reserve's two-day meeting commencing on Tuesday has raised expectations of a 0.25% rate hike, which is almost fully priced in. Additionally, Treasury yields have climbed in anticipation of the impending rate hike.

As the earnings season unfolds, a total of 166 S&P 500 companies, including major tech players, are set to report their second-quarter financials. The broader S&P 500 index has displayed a robust rebound over the past nine months, with over $10 trillion reinvested into the equities market.

The upcoming updates from big tech companies have sparked speculations about the potential for AI-driven growth projections to propel the S&P 500 to reach a new record high.

 S&P500 (SPX) Technical analysis

Analyzing the technical aspect of the S&P 500, its current trading position revolves around the 4535 support level. This support is further reinforced by the 23.6% replacement ratio.

However, it is crucial to note that both the relative strength index (RSI) and the moving average convergence and divergence (MACD) indicator indicate overbought conditions, suggesting a high probability of a bearish correction.

Presently, the 23.6% retracement level and the 50-day exponential moving average offer immediate support at 4535. If the price experiences a bearish break below this level, it may encounter the 38.2% or 50% retracement levels at 4506 and 4484, respectively.

On the other hand, a bullish scenario involves a breakthrough above the 4580 resistance level, which could pave the way for the S&P 500 index to target the 468 or 466 resistance levels.

As traders, it is essential to closely monitor the 4535 level as it presents a potential selling opportunity in case of a bearish break, while a sustained support could signal a buying opportunity.