SPX S&P500 Price Analysis – June 05, 2023

Daily Price Outlook

The global market sentiment continued its upward rally on Monday, driven by positive developments in US government efforts to avoid a potential default. This, combined with encouraging data from both China and the US, further supported the positive market sentiment.

Progress in US Government Measures to Avoid Default

The global market sentiment has improved as the US House of Representatives, controlled by Republicans, showed support for measures to prevent a government default.

The legislation passed with a vote of 314-117 and will now proceed to the Senate for approval before reaching President Joe Biden prior to the Monday deadline. This development has reassured investors and contributed to the positive market sentiment.

Investors are optimistic about the legislation to raise the US government’s debt ceiling, avoiding a potential default. Additionally, positive data from China’s services sector contributes to a positive tone in equity markets. These factors act as headwinds for Gold prices and call for caution among aggressive bullish traders.

Federal Reserve Likely to Maintain Interest Rates

The latest US jobs data showed a higher Unemployment Rate of 3.7% compared to the expected 3.5%. Additionally, Average Hourly Earnings indicated slower wage growth at 4.3% instead of 4.4%.

These factors, combined with less hawkish comments from several Federal Reserve officials, have led to speculations of a possible pause in the central bank’s rate-hiking plans. As a result, traders are hesitant to make aggressive bearish bets.

Traders are awaiting the release of the US ISM Services PMI and monitoring US bond yields, as these factors will impact global market sentiment.

SPX Price Chart – Source: Tradingview

SPX S&P500 – Technical Outlook

The S&P 500 stock market index is displaying strong bullish momentum, with trading occurring near the 4282 level on Monday. Our previous price prediction for the SPX has been accurate, as it has reached our targeted level.

Upon analyzing the four-hour chart, we can observe that the RSI and MACD indicators have entered the overbought zone, indicating a potential exhaustion of buying interest and a likelihood of sellers gaining control for a market correction.

Presently, the SPX is encountering resistance around the 4300 level, and a breach below this level could result in a decline towards the support level at 4240. However, if the SPX manages to stay above 4240, it may resume its upward momentum.

Conversely, a drop below 4240 could lead to further support around 4200, while a breakout above 4300 could establish a target level around 4348.