Technical Analysis

S&P500 (SPX) Price Analysis – Nov 17, 2023

By LonghornFX Technical Analysis
Nov 17, 20233 min

Daily Price Outlook

The global market sentiment has maintained its bullish momentum, showing positive signals throughout the day. On Friday, the Standard & Poor's (S&P) 500 equity index continued its upward trend, extending gains beyond 4,535 and is now poised for consolidation. However, this positive movement can be attributed to various factors. Wall Street is poised to conclude the week with gains, with the S&P 500 registering solid increases above the 4,500 mark.

Economic Indicators Point to Shifting Markets: Dovish Fed Signals, Inflation Concerns, and Global Impact on S&P 500

It's worth noting that traders are feeling uncertain about more interest rate hikes due to cautious statements from US Federal Reserve Chair Jerome Powell. Recent reports show the US inflation rate was slower than expected, with October's Consumer Price Index staying the same. The job market also seems to be cooling, as initial jobless claims increased. This data is strengthening the idea that the Federal Reserve is done raising rates, leading to belief about possible rate cuts in early 2024. This speculation is keeping the yield on the 10-year US government bond low.

Moreover, China's housing market is facing challenges with a drop in the House Price Index, but there's some positive news with growth in Industrial Production and Retail Sales. All these factors might create uncertainty in the global market, especially impacting the Standard & Poor's (S&P) 500 equity index.

US-China Diplomatic Talks: Potential Impact on Global Markets and S&P 500

Furthermore, the meeting between President Joe Biden and Chinese President Xi Jinping has led to a promise to improve their shaky relationship and reopen military communication. President Xi urged the US to stop providing weapons to Taiwan and back what China calls a 'peaceful reunification' with Taiwan. He also requested the US to lift sanctions and ensure a fair playing field for Chinese companies. The aim is to foster a more cooperative and understanding environment between the two nations.

Consequently, this information could extremely impact global market sentiment. If tensions between the US and China can be eased, it has the potential to positively influence investor confidence, thereby contributing to overall market stability.

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

S&P500 (SPX) - Technical Analysis

In the equity markets, the S&P 500's subtle climb to 4508.23, marking a 0.12% increase, belies the undercurrents of a potential bullish shift. The index’s movement suggests a poised stance as it teeters just below a pivot point at $4,516. If the index sustains this momentum, it could test immediate resistance at $4,563, with further headroom up to $4,614. Conversely, support levels at $4,442 and $4,391 provide a safety net against any downward pressure.

Technical indicators such as the Relative Strength Index (RSI), currently at an elevated 76, point to overbought conditions, which typically call for caution amongst traders looking for sustained growth. Yet, the Moving Average Convergence Divergence (MACD) reading of 9 implies that the recent bullish crossover could instill confidence for further upside potential, as long as the index remains above the 50-day Exponential Moving Average of $4,356.

The S&P 500's chart pattern, having broken out of a downward channel, suggests a robust buying interest that may set the stage for continued growth. This pattern break could be a harbinger of a stronger bullish trend if the index maintains above the identified support level.

In summary, while the market's optimism is cautiously justified with the S&P 500 holding above critical support levels, the overbought RSI warrants vigilance. Traders will closely monitor whether the index can breach and sustain above subsequent resistance levels, which would confirm the bullish trend for the short term. The current technical outlook implies a test of higher resistances may be forthcoming, barring any sudden shifts in market sentiment or economic conditions.

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