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News
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News
Asia stocks rise on prospects of Fed easing hikes
News
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Will the euro give the bulls 200 reasons to smile?
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Asset Watch

Will the S&P 500 surpass the 200-day MA?

 

Tuesday, November 15, 2022

After a lower-than-expected Consumer Price Index (CPI) print helped propel the S&P 500 5.54% higher on Nov. 10, the momentum continued on Nov. 11. Morgan Stanley’s Chief U.S. Equity Strategist – who is tactically bullish but remains a long-term bear – expects more upside. He said on Nov. 11:
“We do think this ultimately is a bear market rally.” However, a breakout above the 200-day moving average could “get the animal spirits going” and push the S&P 500 toward 4,200 or 4,300.
“There’s probably further to go, probably through Thanksgiving, [or] maybe even into early December,” he said. “As rates come down … the NASDAQ, which has been the laggard in this rally so far, can now catch up.”
As a result, will the S&P 500 end its ~seven-month drought, or is another August reversal on the horizon?

To explain, the S&P 500 hasn’t closed above its 200-day MA since April. After attempting to achieve the milestone in August, the index quickly reversed and made new 2022 lows. So, with the 200-day MA at 4,081.05, it’s only 2.2% above the Nov. 11 close.

 

However, with the Q3 earnings season nearly over and inflation showing signs of deceleration, the bearish clouds have somewhat dissipated. Additionally, with bullish seasonality present until year-end, the backdrop is relatively constructive.

 

Therefore, should you continue to ride the wave, or is it wise to take profits and wait for a confirmed breakout above the 200-day MA before buying back in?


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