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Trends & Analysis
News

USD gains amid Fed rate cut speculations

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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

Is the S&P 500 running out of gas?

Tuesday, November 21, 2023

It’s been a massive reversal for the S&P 500, as the U.S. equity benchmark has rallied by nearly 400 points over the last three weeks. And with Bank of America’s Chief Investment Strategist Michael Hartnett morphing into a contrarian bull near 4,200, the firm’s bull-bear indicator demonstrated its prescience once again.

 

However, Hartnett told clients on Nov. 17 that it’s time to fade the “epic risk rally,” as he believes the S&P 500 should stall near 4,550. So because lower interest rates have helped fuel the recent upswing, a further drop could signal major economic weakness.

 

“Oil now in a bear market (-22% from Sept high) on recessionary demand or ‘peak geopolitical risk,’” he wrote.

While the risk-reward isn’t as attractive as it was, there are ways to stay invested and manage volatility.

For example, the S&P 500 continues to trade above its rising support line, and if that remains the case, then the outlook is constructive. That said, the index faces resistance from its August 2021, March 2022, July 2023, and August 2023 closing/intraweek highs (the arrows facing down), which could narrow the price action in the days ahead.

Therefore, if the S&P 500 can break above 4,550, the bulls will remain in control. If not, and a breakdown occurs below the rising support line, then the bears would gain the upper hand. Either way, you should monitor these levels carefully.

So, can the bullish stampede continue, or is another correction approaching?


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