Even though the S&P500 continues to rise and the VIX continues to decline, many traders are still not confident about the strength of growth in the US financial market.
The S&P500 (Standard & Poor’s 500), a stock index that measures the performance of 500 large companies listed on the stock exchange in the United States, seems not to be interested in the earnings season and continues its own growing trend without interruption.
Many analysts are wondering if the index will close its sixth green candle consecutive weekly timeframe on Friday, setting a multi-year record.
Traders were so attentive to macroeconomic data that they failed to notice that until proven otherwise, the S&P500 chart had long since assumed a positive technical construction. But what is really happening to the US stock market?
Why Wall Street doesn’t care about economic expectations
Although the first quarter results of technology stocks leave something to be desired, such as those of Netflix, the main US stock index remained positive and the VIX, volatility index of the US stock market reached a 15-months minimum , to the shock of many experts. In addition, no new shocks have emerged from the big US banks, which bodes well for the country’s economic future.
The market as usual moved against the trend of common expectations: the typical April BofA survey showed a high overlap by funds in bond positions. In fact, an overwhelming majority of respondents expect an imminent deterioration in economic conditions.
In essence, many pundits fail to read between the lines why the US stock index continues to post such gains. The matter becomes even more subtle when you consider the fact that, judging by the performance of US futures, there will likely be another interest rate hike next month.
S&P500: technical analysis of the index
From a technical point of view, it is impossible to ignore the strength that the S&P500 index is demonstrating in these trading sessions. The price has practically re-tested the resistance near the 4,200 points after bouncing sharply off the 200-period moving average in March 2023. If taken on a weekly timeframe, the RSI at 14 periods has not yet reached the overbought zone, cheering long traders.
Similarly, the highs reached by the index could be attractive for those who intend to take profit or try to open short positions. In fact, it should be borne in mind that the country’s economic data, in this case, do not seem to play too much a role in favor of the continuation of the trend.
Naturally, the performance of the company quarterly of this period plays a fundamental role in understanding the state of health of the US economy and for this reason the markets may simply have put the autopilot on hold to clarify the situation in more detail .
Original article published on Money.it Italy 2023-04-19 17:57:02. Original title: S&P500: siamo vicini ad un’inversione di tendenza?
