SP500 Back On Bullish Track

Andreas Thalassinos
Andreas Thalassinos

22.2.2024

Investors eagerly anticipated earnings from the AI leader Nvidia (NVDA) while also reviewing the latest release of Federal Reserve minutes.  The FOMC minutes have reaffirmed the Fed's intentions to avoid cutting interest rates too quickly.  Despite this news, US stocks experienced a late-day rally, which helped improve market confidence.  Subsequently, the market has witnessed a resurgence of bullish momentum, which has propelled the S&P 500 toward its yearly peak.
Traders will be keeping a close eye on the market as significant economic data that has the potential to affect the economy's health is due to be released.

 

Overview

Investors eagerly anticipated earnings from the AI leader Nvidia (NVDA) while also reviewing the latest release of Federal Reserve minutes.  The FOMC minutes have reaffirmed the Fed's intentions to avoid cutting interest rates too quickly.  Despite this news, US stocks experienced a late-day rally, which helped improve market confidence.  Subsequently, the market has witnessed a resurgence of bullish momentum, which has propelled the S&P 500 toward its yearly peak.
Traders will be keeping a close eye on the market as significant economic data that has the potential to affect the economy's health is due to be released.

Fundamentals

According to the Fed minutes, policymakers expressed a general consensus that they require greater assurances regarding the decline in inflation before contemplating rate cuts.  The language used in the minutes seems to emphasize a cautious and possibly slower approach to rate cuts that market participants expect to begin in June.

Moreover, the current bullish momentum of the S&P 500 can be attributed to the outstanding Q4 performance of the "Magnificent 7" with Nvidia's most recent results propelling the Index towards the highest point of the year.

Technical Analysis

The S&P 500 Index has been rallying since October 30 last year, following a text-book-like upward trajectory.  Despite the recent corrective wave that pushed toward the 50-period Moving  Average line and the first support level of the weekly Standard Pivot Points, the bulls managed to regain control, lifting the Index out of the "dangerous zone".  Both the Moving Average and the Momentum oscillator are in agreement with the bullish scenario.  More specifically, the S&P 500 prices hover above the Moving Average line, and the Momentum oscillator remains above its baseline.

Potential Upside Targets

Should the bullish momentum continue to dominate the market, traders may consider the following three potential upside targets:

5049.11: The initial target stands at 5049.11, aligning with the peak established on February 12.
5118.78: The second price objective is seen at 5118.78, corresponding to the second resistance utilizing the weekly Pivot Points methodology.
5258.58: An additional potential price objective could be identified at 5258.58, representing a resistance estimated using the 261.8% Fibonacci extension drawn from the peak at 5049.11 down to the trough at 4919.65.

Conclusion and Considerations

The current positive momentum propelled by Nvidia's Q4 results points to a potential rally in the S&P 500 toward the year's high.   Moreover, keeping up-to-date with economic events and geopolitical changes will be crucial in making informed trading choices in the financial markets.

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Andreas Thalassinos
Andreas Thalassinos

Andreas Thalassinos is a recognized authority in the financial markets and world renowned for his expertise in algorithmic trading. He is a Certified Technical Analyst and highly respected lecturer in the education of traders, investors, and financial markets professionals. Thalassinos has played a key role in the development of education within the industry, training tens of thousands of traders of all skill levels. Traders value his seminars and workshops for the rich content, his passionate, charismatic, and lively presentations.