S&P 500 index vs resistance line: Acting like ivy
Main U.S. equity index futures edge red
Mortgage market index 206.5 vs 212 last week
ADP National employment 150k vs 160k estimate
Initial jobless claims 238k vs 235k estimate
Euro STOXX 600 index up ~0.7%
Dollar slips; bitcoin down >3%; crude edges up; gold gains ~1%U.S. 10-Year Treasury yield edges dips to ~4.41%
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S&P 500 INDEX VS RESISTANCE LINE: ACTING LIKE IVY
The S&P 500 index .SPX posted a fresh record closing high on Tuesday, ending at 5,509.01. With this, it finished above the 5,500 level for the first time ever, and is now up 15.5% YTD.
However, since mid-June, the benchmark index has been struggling to cleanly overwhelm a weekly resistance line from the year 2000:
This line resides around 5,490 this week.
Since mid-June, the S&P 500 has been oscillating around this upwardly slanted log-scale resistance line, though the index has yet to post a weekly close above it.
A logarithmic chart uses a logarithmic, not linear scale. On log charts the Y-axis is dependent percentage changes, while linear charts display absolute values. Therefore, a log-scale chart can be more fitting for longer-term analysis.
Meanwhile, with this line hindering the upside, traders are also eyeing lagging momentum on a weekly basis.
In late March, as the SPX was stalling out ahead of a near 6% sell-off, the 14-week Relative Strength Index (RSI) hit 79, or its most overbought level since January 2020.
Now, despite, higher S&P 500-highs, the RSI ended Tuesday just shy of 75. This lagging behavior has traders on edge. In the event of a weekly downturn, a divergence may solidify. Of note, the RSI diverged going into the S&P 500's early January 2022 top.
In the event of a much greater bull-run, the resistance line from 1929 comes in around 5,935 this week.
In terms of initial support, the mid-May high was at 5,341.88, while the rising 10-week moving average resides around 5,340 this week.
(Terence Gabriel)
*****
FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:
KICKING THE CAN DOWN THE ROAD - CLICK HERE
TOUGH TIMES ARE NOT OVER FOR EUROPEAN AUTOS - CITI - CLICK HERE
HAVEN BRITAIN? CLICK HERE
A CLOSER LOOK AT U.S. DRUG PRICING RISKS - CLICK HERE
THE GRASS IS GREENER TODAY IN EUROPE - CLICK HERE
SUNNY START IN EUROPE - CLICK HERE
POWELL SPARKS OPTIMISM ON RATE CUTS - CLICK HERE
SPX07032024 https://tmsnrt.rs/3zDUH3C
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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