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S&P 500 – Jingle All The Way Higher

Hourly Chart

SPX_241213H1 [1]

We’re 1 more day away from Christmas, but it seems that presents have already come for the bulls. Despite the tapering action by the Fed last week, US stocks continued to rise steadily as market believed that the $10B taper is merely a token action to appease the hawks within the FOMC roost who have been baying for a larger/more symbolic cut. Or perhaps the market has come of age and is no longer heavily influenced by the expected reduction in QE, and right now traders are trading purely based on strong US economic fundamentals – a much better reason to buy stocks compared to the “QE will save us all” thinking that could have resulted in a bubble and an eventual fire sale when prices are no longer sustainable.

Whatever the actual reason may be, it is clear that sentiment is bullish, allowing S&P 500 to hit yet another record high yesterday. This record high came in spite of weaker than expected US economic data – Personal Income grew at 0.2% versus an expected 0.5%, while Core Personal Consumption grew 1.1% vs a 1.2% forecast. U. of Michigan Confidence (Final) was also weaker than expected, standing at 82.5 despite analysts believing that the market sentiment indicator would be slightly more bullish at 83.0. Nonetheless, it should be noted that none of the aforementioned numbers are objectively bad, and still signal growth in the US economy. Hence, market is bullish but not hysterical – a key difference – and the weak bullish rally yesterday supports this assertion.

This reduces the likelihood of strong pullbacks in Jan, and may even suggest that future tapering action may be met with muted bearish response. That being said, it doesn’t mean that S&P 500 will simply rally all the way up right now. From a technical perspective, prices have hit Channel Top recently and opens up the possibility of price hitting Channel Bottom. Furthermore, trading volume for the rest of December is most likely going to be low as well, hence do not expect strong directional push from here out.

 

Weekly Chart

SPX_241213W1 [2]

Weekly Chart is undoubtedly bullish with the breakout of Channel Top confirmed from last week’s rally. Hence, bulls are indeed primed for further bullish ventures in the future. Given that Stochastic readings are extremely overbought and may be pulling back lower, a retest of Channel Top cannot be ruled out in the next couple of weeks, strengthening the call for patience right now.

More Links:
AUD/USD – Aussie Edges Higher [3]
USD/CAD – Loonie Keeps Climbing As GDP Beats Expectations [4]
GBP/USD – Pound Posts Slight Gains To Start Off Week [5]

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Mingze Wu

Mingze Wu [10]

Currency Analyst at Market Pulse [11]
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu
Mingze Wu

+Mingze Wu [14]