Daily Price Outlook
Despite the U.S. Federal Reserve’s pause in its aggressive interest rate rise cycle, global stock markets, including Wall Street’s S&P 500 and MSCI’s world stocks gauge, have continued to rally, pushing into bull market territory and reaching multi-month highs.
While central banks like the European Central Bank and the Bank of England are raising rates, investors are seemingly unfazed and remain focused on the growth narrative, disregarding hawkish guidance.
This divergence between central bank concerns about inflation and market optimism leads investors to seek alternative strategies, such as investing in high-yield bonds and emerging market debt.
However, economists warn of lingering recession risks and the potential impact of further rate hikes on the banking sector and small businesses.
Professional investors face the challenging dilemma of trading a narrative they may not fully believe or potentially missing out on gains in the market.
SPX Price Chart – Source: Tradingview
S&P500 (SPX ) – Technical Analysis
The S&P 500, the leading stock market index, is currently exhibiting strong bullish momentum on Friday, following its breakthrough above the $4,375 level. It is currently trading around the $4,425 level.
When examining the daily timeframe, we can see that the S&P 500 has successfully surpassed the 50-day exponential moving average, which is now acting as a support level around $4,283.
Both the relative strength index (RSI) and moving average convergence divergence (MACD) indicators are indicating overbought conditions, suggesting that the market may be overextended and susceptible to potential selling pressure.
Zooming in on the hourly timeframe, there is a trend line providing support around the $4,434 level. A failure to break above this level or a close of candles below it could trigger a bearish correction in the S&P 500.
On the downside, immediate support is anticipated around the $4,379 level, followed by the next support at the $4,300 level, which aligns with an hourly trend line.
Alternatively, if the S&P 500 manages to break through the $4,435 level, it could potentially propel the index towards the $4,500 or even $4,595 level.
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