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Trends & Analysis
News

USD gains amid Fed rate cut speculations

News

Is the silver squeeze back?

News

Li Auto’s stock hits a speedbump on Q1 results

News

Gold closes week higher on rate cut speculations

News

Week Ahead Preview: 20th of May

News

Walmart’s stock hits record high on Q1 results

Asset Watch

Does the S&P 500 still have support?

Tuesday, October 24, 2023

It’s been a rollercoaster ride for the S&P 500 as daily sentiment shifts from optimism to pessimism. And as the latter reigned supreme on Oct. 20, the index confronted more selling pressure. However, the recent correction has a major bear turning bullish as an extreme contrarian indicator flashes green.
Bank of America’s Chief Investment Strategist Michael Hartnett expects much lower prices in 2024, but with the firm’s bull-bear indicator falling below two, on Oct. 19 he noted “investors are sufficiently bearish” to ignite a rally over the next three to four weeks.
The last 20 bull-bear readings below two resulted in U.S. stocks gaining a median of 5.4% over the next three months. Because of this, the “contrarian buy signal” has him fading investors’ dire outlook.

The S&P 500 also ended last week below trendline support, as the index closed below the upward-sloping grey line. Yet, the 50-week MA stands near 4,185, and the level acted as a significant inflexion point during the August and December 2022 rally attempts. In other words, it was resistance back then and could provide support now.

 

Furthermore, seasonality remains on the bulls’ side, as late October and early November typically coincide with sharp upswings. So, stocks ‘performance could brighten if interest rates slow their rapid rise.

 

Is the S&P 500 ripe for a rebound, or will the 50-week MA be the next casualty en route to new weekly lows?


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