The S&P 500 May Have Positive Signs
Stocks have declined since early December, but some traders may expect the longer-term uptrend to resume.
The first pattern on today’s S&P 500 chart is 5,783, the close on Election Day (November 5). The index tested and held that level last week, potentially suggesting support is in place.
Second is the falling trendline along the recent peaks. SPX may be attempting to push back above that resistance.
Third, MACD is turning higher and prices are back above the 50-day simple moving average (SMA).
Next, the 63-day rate of change has been positive since November 2023. It bounced slightly above 0 last week to preserve that condition. Prices also held their rising 100-day SMA. Those points may confirm longer-term strength.
Speaking of November 2023, last week saw the 10-year Treasury yield revisit levels from that period before dipping. Staying below those levels may be a positive for sentiment.
Speaking of sentiment, the American Association of Individual Investors' (AAII) weekly survey just had a bullish reading of 25 percent and a bearish reading of 41 percent. Those were the most extreme on the negative side since early November 2023.
In other words, three indicators point back to the start of the current bull run in November 2023: 63-day rate of change, the 10-year Treasury yield and AAII sentiment. In addition, data from FactSet suggests earnings are poised for their quickest growth since late 2021.
Could those points -- combined with the technical patterns on SPX -- be interpreted as positives?
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The first pattern on today’s S&P 500 chart is 5,783, the close on Election Day (November 5). The index tested and held that level last week, potentially suggesting support is in place.
Second is the falling trendline along the recent peaks. SPX may be attempting to push back above that resistance.
Third, MACD is turning higher and prices are back above the 50-day simple moving average (SMA).
Next, the 63-day rate of change has been positive since November 2023. It bounced slightly above 0 last week to preserve that condition. Prices also held their rising 100-day SMA. Those points may confirm longer-term strength.
Speaking of November 2023, last week saw the 10-year Treasury yield revisit levels from that period before dipping. Staying below those levels may be a positive for sentiment.
Speaking of sentiment, the American Association of Individual Investors' (AAII) weekly survey just had a bullish reading of 25 percent and a bearish reading of 41 percent. Those were the most extreme on the negative side since early November 2023.
In other words, three indicators point back to the start of the current bull run in November 2023: 63-day rate of change, the 10-year Treasury yield and AAII sentiment. In addition, data from FactSet suggests earnings are poised for their quickest growth since late 2021.
Could those points -- combined with the technical patterns on SPX -- be interpreted as positives?
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options and futures. If you're born to trade, we could be for you. See our Overview for more.
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options or futures); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at https://www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on https://www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission and a futures commission merchant licensed with the Commodity Futures Trading Commission). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association, and a number of exchanges.
TradeStation Securities, Inc. and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., both operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit https://www.TradeStation.com/DisclosureTSCompanies for further important information explaining what this means.
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