He S&P 500 proved to have a history of breaking records, this time with an increase of 0.8%, made possible by the willingness to boost stock prices and the main indexes of the Federal Reserve. The Nasdaq rose 1.5%, while the Dow Jones Industrial Average barely budged from its rally on Wednesday, remaining nearly unchanged from its previous value.
The Federal Reserve stabilized the economy by cutting rates by 25 basis points, a move market participants had expected after September's larger 50 basis point cut. Chairman Jerome Powell emphasized that the Federal Reserve relies on data to guide its decisions and can adjust policy up or down based on economic results.
Strong growth amid active Fed rate cuts
Although the Fed is using a little different language on inflation, replacing “further progress” with “progress” alone, analysts were imperceptible.
Goldman Sachs considered the change in wording as a ratification of the fact that the rate reduction process is underway, rather than a sign of lack of confidence. Inflation is still a little above the Federal Reserve's 2% target, although it cooled a bit in September.
Analysts predict that the S&P 500 will have better results in the future and that fiscal policies will serve as a catalyst for the creation of a better business climate. Evercore ISI forecast says the index may peak in the middle of next year due to rumors and investor optimism around the business-friendly environment, including low taxes and reduced regulations in the current administration.
Powell also commented on the recent election, which he said would not affect Fed policy in the short term. The monetary authority focuses on economic factors rather than political issues. Overall, the S&P 500 is trending higher as market sentiment improves with policy easing and positive business forecasts.
S&P 500 Index Chart Technical Analysis
SP/USD 15-minute chart (Source: TradingView)
The chart shows a 15-minute snapshot of the S&P 500 Index (SPX) over the previous days. However, the index, which plummeted between October 30 and early November, saw a significant rebound around November 5. The new increase caused a strong bullish dynamic through consecutive green candles that represented buying pressure that drove the price up. to a recent high of 5,983.84.
The Relative Strength Index (RSI) appears at the bottom of the chart and actively demonstrates the bullish trend. Its values have grown significantly, reaching 70, indicating that the index is overbought. This measure of overbought is usually a warning sign, showing the possibility of the index retracing or consolidating in the short term, as sellers who drove the stock to this high level may exit the market.
Traders should watch whether the index will focus on the current level or fall back to $5,900 or lower support zones.
All in all, although the trend continues to rise, it is important to be cautious due to the overbought RSI and the recent test of highs.
Take your profits from your current positions or limit losses on your profits as the pullback maybe soon. Entrants should be patient and wait for favorable support at the 5,900 level for a better entry point.
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