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Trends & Analysis
News

Week Ahead Preview: 17th of February

News

Europe stocks hit record high on strong earnings

News

BRIC currencies mostly gain as US inflation rises

News

Refresh your portfolio with Coca-Cola?

News

GBP/USD price may rally to multi-week high

News

EIA ups oil output forecast, but supply fears loom

Trends & Analysis
News

Week Ahead Preview: 17th of February

News

Europe stocks hit record high on strong earnings

News

BRIC currencies mostly gain as US inflation rises

News

Refresh your portfolio with Coca-Cola?

News

GBP/USD price may rally to multi-week high

News

EIA ups oil output forecast, but supply fears loom

Asset Watch

Who wins the S&P 500’s bank battle?

Thursday, February 29, 2024

It’s been an epic risk rally over the last few months, as the S&P 500 has left the doubters in the dust. Goldman Sachs strategists told clients on Feb. 26 that “extremely” concentrated positioning in the AI beneficiaries lays the foundation for a catch-up trade by the underperformers.
There is “space for bullish sentiment and positioning to be further supported, especially if we start seeing a more meaningful rotation out of cash and into risky assets and laggards within equities,” they wrote.
Yet, JPMorgan strategists countered that “We see upside risks to inflation given loose financial conditions, tight labour markets, high government spending, and geopolitics… The narrative could turn from goldilocks toward 1970s-style stagflation… [with] significant implications for asset allocation.”

While only one investment bank will emerge victorious, monitoring a couple of key levels can help you stay invested and still manage risk. For example, the S&P 500’s 20 and 50-week moving averages have been reliable support and resistance levels for the last few years. The former lies near 4,700 while the latter is near 4,470.

In 2021, the 20-week MA (the white line) largely held as the index soared to an all-time high. If it remains above the milestone, the outlook is bullish, and minor pullbacks are healthy corrections. If not, the index must hold the 50-week MA (the blue line) to avoid re-enacting the carnage witnessed throughout 2022.

So, do the bulls deserve the benefit of the doubt, or is caution warranted in the weeks ahead?


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