S&P500 (SPX) Price Analysis – Nov 24, 2023

Daily Price Outlook

Global markets have been consistently showing positive signs, maintaining their upward rally. Asian stocks have reached a two-month peak, and US indices are climbing as the Thanksgiving holiday approaches. Investors are closely monitoring various economic indicators and corporate earnings reports, speculating on potential shifts in future monetary policies.

This trend was evident as U.S. indices experienced gains. The S&P 500 increased by 0.4%, the Dow Jones Industrial Average by 0.5%, and the Nasdaq also saw a modest uptick. Notably, major tech players such as Microsoft and Alphabet (NASDAQ: GOOGL) contributed to this surge. However, Broadcom (NASDAQ: AVGO) witnessed a decline in its shares following the announcement of a deal with VMWare.

Impact of Weak US Dollar and Fed Expectations on S&P 500

It is worth noting that the US Dollar Index is trading weak around 103.70. Despite cautions from the Fed, markets believe they won't be too strict after the report of soft inflation figures in October. The US Bureau of Labor Statistics shared that October's Core Consumer Price Index (CPI) didn't meet expectations, coming in at 4% YoY instead of the expected 4.1%. The headline figure also fell short at 3.2% YoY, below the expected 3.3%. Furthermore, the Core Producer Price Index (PPI) for October was lower than expected at 2.4% YoY instead of 2.7%.

Meanwhile, the November minutes from the Federal Open Market Committee (FOMC) revealed concerns about inflation. The market is confident that the Federal Reserve won't raise interest rates in December and is even betting on rate cuts sooner than expected, possibly in May 2024, with some also betting on a rate cut in March.

Therefore, the weak US Dollar and expectations of a less strict Fed stance, driven by soft inflation figures, contribute to a positive sentiment. This could support the S&P 500 with potential gains.

S&P500 (SPX) - Technical Analysis

The S&P 500 Index continues to exhibit signs of strength on November 24, with a modest uptick of 0.41%, bringing the index to 4556.63. This positive movement places the S&P 500 above its pivot point of $4,561, suggesting a bullish inclination in the short term. The immediate resistance levels are set at $4,603, followed by more formidable barriers at $4,686 and $4,770. Conversely, the index finds support at lower levels, namely $4,474, $4,430, and $4,350, which could offer a cushion against any potential retracements.

The technical indicators for the S&P 500 paint a picture of bullish sentiment, albeit with cautionary notes. The Relative Strength Index (RSI) stands at 76, venturing into overbought territory, which might signal a possible pullback or consolidation in the near future. The Moving Average Convergence Divergence (MACD) displays a value of 0.10, with a signal line at 57.78, indicating a potential upward momentum. Additionally, the index is trading above its 50-Day Exponential Moving Average (EMA) of $4,533, reinforcing the current bullish trend.

From a chartist's perspective, the S&P 500 is maintaining a strong position above the crucial $4,500 level. This level now acts as a critical benchmark, with the index's movement above this point further supporting the bullish narrative.

In conclusion, the overall trend for the S&P 500 remains bullish, especially as long as it stays above the $4,500 threshold. In the short term, market participants should brace for the index to test the immediate resistance at $4,603, with a potential to extend gains towards the $4,686 and $4,770 levels. However, traders should remain vigilant of the overextended RSI, which could lead to a temporary consolidation or a slight pullback before any further upward movements.

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