Fundamental
Overview
The S&P 500 is slowly
crawling back to the all-time high. The market continues to look forward to the
next year with Trump’s policies being a positive driver for growth.
The only bearish reason we
had for the stock market was the rise in Treasury yields. That’s generally
bearish only when the Fed is tightening policy though not when yields rise on
positive growth expectations.
Right now, the Fed’s
reaction function is that a strong economy would warrant an earlier pause in
the easing cycle and not a tightening. That should still be supportive for the
stock market in the bigger picture.
If the Fed’s reaction
function were to change to a potential tightening, then that will likely
trigger a big correction in the stock market on expected economic slowdown. For
now, the pullbacks look as something healthy and opportunities to buy the dips.
S&P 500
Technical Analysis – Daily Timeframe
S&P 500 Daily
On the daily chart, we can
see that the S&P 500 recovered all the losses and it’s now back near the
all-time high. The buyers will want to see the price breaking higher to
increase the bullish bets into new highs. The sellers, on the other hand, will
likely step in around these levels to position for a drop back into the major trendline
around the 5900 level.
S&P 500 Technical
Analysis – 4 hour Timeframe
S&P 500 4 hour
On the 4 hour chart, we can
see that we have another minor upward trendline defining the current bullish
momentum. The buyers will likely keep on leaning on it to position for new
highs, while the sellers will look for a break lower to increase the bearish
bets into the major trendline.
S&P 500 Technical
Analysis – 1 hour Timeframe
S&P 500 1 hour
On the 1 hour chart, we can
see that we are having a pretty slow and choppy price action these days due to
the holidays. This could lead to fake breakouts due to the intraday noise. The
sellers will want to see the price falling below the higher low around the 6017
level to start targeting new lows, while the buyers will likely pile in around
these levels to position for a rally into a new all-time high. The red lines
define the average daily range for today.