S&P 500 Facing Major Test Above As Stocks Close A Bullish Month
Stock markets turned bullish at the end of March, overcoming many worries, such as concerns over recession, inflation, and bank panic, which had a great impact on market sentiment. Despite this, the S&P 500 ended up 7% higher, and the Nasdaq saw a 16% increase.
Last Friday, the market bias towards risk assets was evident, helped by a softer PCE inflation report from the US. However, the USD remained broadly strong, with only the Canadian dollar outperforming it. The Euro weakened as the ECB’s Villeroy downplayed the outlook for significantly more rate hikes, and flow-driven trade was also a factor.
Late-day comments from Fed officials were largely ignored, as the market awaits the same data as the FOMC. The pricing suggests a 50/50 chance of a rate hike in May, but there is limited scope for hiking after that meeting. This is positive news for risk trades such as stock markets and S&P 500 is looking like it is about to form a bullish reversal, after the bearish period since 2021 as inflation started to increase.
Although the performance of this US index in the first quarter was not consistent. The index experienced significant fluctuations, starting the year with a strong performance in the first month, then dropping in February, rising again in March, and ultimately finishing the quarter with a gain of approximately 7%.
The 200 SMA (purple) held as support on the weekly chart in October last year and the price has been making higher lows, which is a bullish sign. Although buyers still have to overcome the 100 SMA (green) which acted as resistance early this month, although now the bank panic has diminished so we are at a different period, but we can say nothing for certain, with the latest Oil production announcement cut yesterday, which will likely affect the global economy for the worse.
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