Technical Analysis

S&P500 (SPX) Price Analysis – Dec 01, 2023

By LonghornFX Technical Analysis
Dec 1, 20233 min

Daily Price Outlook

The S&P 500 has demonstrated a positive trajectory in today’s trading session, registering a gain of 17.22 points, or an increase of 0.38%, bringing the index to 4,567.80. This upward movement reflects a growing investor confidence in the market.

Bank of America’s Sell Side Indicator and Market Outlook

According to Bank of America’s Sell Side Indicator (SSI), a contrarian sentiment gauge, there has been a recent increase to 53.6%, up by 56 basis points. This rise comes on the heels of the S&P 500's nearly 9% rally in its best month since July 2022, indicating a strong recovery momentum.

Historical Significance and Future Predictions

While the SSI has only risen modestly from its May low, historical trends suggest that the current level often precedes positive 12-month returns for the S&P 500. The indicator predicts a +15% expected price return over the next year, potentially pushing the S&P 500 to around 5300 by end-2024. Currently, the SSI is in a "Neutral" position but shows a tendency towards a "Buy" signal.

Analysts' Viewpoint Amidst Market Uncertainties

Despite the market not being dominated by high conviction or euphoria, Bank of America’s analysts maintain a constructive outlook on equities. They cite factors like reduced uncertainty in inflation and interest rates, effective corporate cost-cutting, and stable profit margins as reasons for optimism. The bank’s target for the S&P 500 by 2024-end is 5000.

Wall Street’s Performance and Economic Data

Following a strong November, U.S. stock futures have shown muted movements today. The Dow Jones Futures edged up slightly, while the S&P 500 Futures saw a marginal increase. Anticipation builds around Federal Reserve Chair Jerome Powell's speech and the release of key economic data, including construction spending and ISM Manufacturing figures.

Corporate Sector Developments

In corporate news, the market awaits earnings reports from companies like Dominion Energy, Gartner, and Cardinal Health. Disney's reinstatement of its dividend and Ulta Beauty’s premarket surge post-strong quarterly results are key highlights. Tesla also remains a focal point with its Cybertruck pricing announcement and delivery start.

S&P500 (SPX) Price Chart – Source: Tradingview
S&P500 (SPX) Price Chart – Source: Tradingview

S&P500 (SPX) - Technical Analysis

The S&P 500 index, a key benchmark for the broader U.S. stock market, has exhibited a positive momentum, closing at 4567.81, a 0.38% increase. This upward movement is reflective of a broader market sentiment that remains cautiously optimistic, driven by a mix of economic indicators and corporate earnings reports.

In terms of technical analysis, the index is hovering around a pivot point of $4,582. The immediate resistance levels are identified at $4,604, $4,639, and $4,676.

These thresholds will be critical in determining the index's ability to sustain its upward trajectory. Conversely, the support levels are set at $4,547, $4,523, and $4,488, offering stability against potential market pullbacks.

The technical indicators present an insightful picture. The Relative Strength Index (RSI), currently at 69, is just below the overbought threshold, indicating robust buying interest in the market. This is corroborated by the Moving Average Convergence Divergence (MACD) value of -7.56, which, despite being negative, is countered by a signal value of 39, suggesting that bullish momentum could resume.

Moreover, the index's position relative to its 50-Day Exponential Moving Average (EMA) of $4,553 indicates a short-term bullish trend. The index's movement above this average signals continued investor confidence and potential for further gains.

The chart analysis highlights a notable pattern - the double top's breakout is now acting as a support level at $4,529. This pattern's resolution reinforces the bullish narrative, suggesting that the index may continue its climb in the near term.

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