S&P500 Records and Volatility: Trade War Resolution Boosts Market
The trade war with China has taken a turn for the better, with a favorable resolution on October 10th. Meanwhile, the SP500 has been on a rollercoaster ride, setting records and experiencing significant shifts in sentiment.
The month of October started with a bang for the SP500. The index opened with a euphoric move to new highs, only to reverse lower on Wednesday following the Fed's statement. Despite the volatility, the index managed to finish the week roughly five points below its starting point. This week's 'doji' pattern, with an open and close around the same level, could indicate a bearish trend if prices stay below 6814 all week.
The SP500 has been on an impressive run since May, gaining nearly 23% by October. This strong performance suggests that the rally can shrug off headwinds such as poor seasonality. Initial support is at the September high of 6700, with the October low of 6550 acting as a secondary support. The key level for this bull market, however, is 6147.
Wednesday's FOMC meeting was a negative driver for the stock market as Chair Powell underscored that a December cut is 'not a foregone conclusion'. This paring of the market's expectation for a cut led to a pause and dip from Wednesday's peak. However, there was nothing particularly bearish about the drop, and October closed with a bullish bar. Looking ahead, further upside targets are based on Fibonacci extensions and measured moves.
The trade war resolution has provided a clear coast for the stock market for a few months. The SP500, despite its volatility, has shown resilience and continues to target higher levels. Institutions and economists are analyzing AI's impact on job losses and market disruptions, which could influence the Federal Reserve's monetary policy in the future. As always, investors should keep a close eye on key levels and indicators to navigate the market's ups and downs.
