S&P500 (SPX) Price Analysis – March 27, 2023

Daily Price Outlook

The S&P 500 (SPX) Index is trading at 3,970.99, up by 0.56% in 24 hours. Despite ongoing financial turbulence, the stock index is rising as Fed officials reassured investors that the US banking sector would maintain stability.

US Officials Reassure Investors

Deutsche Bank, a German lender, experienced a drop in shares on Friday as credit default swaps increased, raising concerns about the sustainability of European banks. A significant rise in Deutsche Bank's credit default swaps has reignited market worries.

European Central Bank President Christine Lagarde attempted to alleviate concerns about the stability of the European banking industry, emphasizing that eurozone banks are resilient with high liquidity and capital levels.

Conversely, Neel Kashkari, President of the Minneapolis Fed, mentioned on Sunday that the current stress in the banking sector and the possibility of a follow-up credit crunch are pushing the US closer to a recession. The Fed will face a difficult decision regarding interest rate hikes if recession fears become widespread.

St. Louis Fed President James Bullard believes the Fed will likely need to raise interest rates more than initially expected, given the reduced pressure on the banking sector due to the US government's prompt response and the continued well-being of the economy and inflation.

Bullard's comments alleviated risks that excessively high rates pose to the banking sector. It also emphasized the Fed's focus on bringing inflation to its target level rather than worrying about further bank runs.

Fed policymakers expressed confidence in the stability and resilience of the US financial system while emphasizing that inflation remains a significant issue. This helped boost the S&P 500 Index.

Mega Cap Stocks Experience Gains

Amid market uncertainty, investors are buying stock in large American corporations like Apple, Microsoft, Alphabet, Amazon, and Nvidia, which have typically driven the market upward.

Since March 8, the stocks of these companies have risen between 4.5% and 12%.

The shift in investment is attributed to factors such as strong balance sheets, healthy profit margins, and business models expected to perform better in the event of a recession.

However, investing in mega-cap companies presents challenges, as indexes like the S&P 500 are influenced by a narrower group of firms due to their expanding market cap. If investors quickly withdraw from leading technology and growth companies, this could cause instability in broader markets.

Additionally, Activision Blizzard topped the list of top gainers. The UK's Competition and Markets Authority (CMA) stated that new data showed "the acquisition would not result in a material reduction of competition in console gaming in the UK," resulting in Activision Blizzard's (ATVI) shares increasing by over 5%.

S&P500 Intraday Technical Levels

Support      Resistance

3909            3998

3870            4047

3821            4087

Pivot Point: 3958

S&P500 – Technical Outlook

The S&P 500 is trading at the 3,970 level and is receiving immediate support at the 3,920 level. On the upside, the double-top pattern is expected to present significant resistance at 4,039, and a bullish cross above this specific level can potentially lead the SPX price toward the next resistance level of 4,160.

Conversely, if the SPX breaks below 3,920, there is likely to be a strong wave of further selling pressure until it reaches the 3,840 and 3,750 levels. Regarding leading technical indicators such as MACD and RSI, both indicators are currently in the buying zone, suggesting that the bullish bias remains strong for Monday.

As a result, most investors will likely focus on the 3,900 level, as a candle close above this specific level has the potential to drive an upward trend in the SPX price today.

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