S&P500 (SPX) Price Analysis – Nov 22, 2024
Daily Price Outlook
The global market has been showing positive signs, with the S&P 500 reaching impressive levels, hitting around 5,963. Despite worries about inflation and slower-than-expected rate cuts, the index has been on a strong upward trajectory. This surge could be linked to growing investor optimism about a potential rate cut in December.
Meanwhile, people are also feeling hopeful about the potential economic boost from a possible Trump administration, which seems to be giving investors confidence. Besides this, the latest jobless claims data has been solid, and many see this as a good sign for corporate profits, keeping the index on an upward path.
US Dollar Strength and Fed Rate Expectations Create Mixed Outlook for S&P 500
On the US front, the broad-based US dollar has been on an upward trend and is currently trading near 107.00, just below its highest level of the year. This increase followed the release of the previous week's Initial Jobless Claims data, which showed a slight decrease in jobless claims.
Futures traders are now predicting a 57.8% chance that the Federal Reserve will cut interest rates by 0.25% in December, a drop from 72.2% last week. Traders are also looking forward to the upcoming US S&P Global Purchasing Managers’ Index (PMI) data and the final Michigan Consumer Sentiment report on Friday for further market direction.
The recent PMI data showed a slight contraction in the private sector, with the Judo Bank PMI Composite Output Index dropping to 49.4 in November from 50.2 in October. This marks the second contraction in three months.
However, Initial Jobless Claims dropped to 213,000 for the week ending November 15, which was lower than expected and better than the previous week's revised data. This gave the US dollar some support, especially as Fed officials have expressed cautious remarks about interest rate cuts.
Furthermore, the Reuters poll shows that most economists expect the Fed to cut rates by 0.25% in December, but they predict smaller cuts in 2025 due to concerns over inflation from President-elect Trump's policies.
Whereas, some Fed officials have suggested that more rate cuts are necessary, they want to proceed carefully to avoid making moves too quickly. Fed Chair Jerome Powell also downplayed the chances of immediate rate cuts, pointing to the strong economy and ongoing inflationary pressures.
Therefore, the US dollar's strength and expectations of slower rate cuts could create uncertainty for the S&P 500, as higher rates may pressure corporate earnings. However, the strong labor market and resilient economy may continue to support investor confidence in the index.
S&P 500 – Technical Analysis
The SPX index is trading at $5,948.70, up 0.53% on the day, as the market shows signs of sustained upward momentum. The immediate resistance at $6,017.29 is within reach, with additional targets at $6,056.54. On the downside, immediate support is at $5,926.35, followed by key levels at $5,838.15 and $5,808.52, forming a solid base for potential pullbacks.
The pivot point at $5,987.87 serves as a critical threshold for continued bullish momentum. A decisive move above this level could propel the index further into resistance territory, while a breach below would signal caution.
The 50-day EMA, currently at $5,939.36, is providing dynamic support, reinforcing the index's underlying strength. Traders are advised to consider entry points above $5,925 with a target of $6,000 and a stop-loss at $5,882.
A breakout above $6,017.29 could drive the index toward $6,056.54, though short-term corrections remain possible if broader market sentiment shifts.
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