Fundamental Overview
The S&P 500 managed to extend the rally into a new all-time high recently. The conditions for further upside in the index remain in place.
In fact, Trump’s policies will be a positive driver for growth in 2025 and with the Fed remaining in an easing cycle, growth should remain positive and might even accelerate as signalled already by the Atlanta Fed GDPNow indicator.
The only bearish reason we had for the stock market was the rise in Treasury yields in the past couple of months. 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.
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
On the daily chart, we can see that the S&P 500 extended the rally into a new all-time high recently and it’s now pulling back from the highs. The buyers will likely step in around the previous all-time high at 6053 to position for further upside. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the trendline around the 5900 level.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a 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 6053 level.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have an interesting zone around the 6090 level where the price reacted from several times in the past few days. The sellers will likely step in there to position for the break below the trendline, while the buyers will look for a break higher to increase the bullish bets into a new all-time high. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US NFP report.