The S&P 500 rallied on Monday, but is there any short-term upside left?
The S&P 500 rallied by 3.26% on Monday as investors reacted positively to the U.S.-China trade agreement announced over the weekend. The index broke above its week-long consolidation, reaching its highest level since March 5 (Monday high: 5,845.37).
Today's CPI data came in slightly lower than expected at +0.2% month-over-month, providing additional support for equities. While the market may be overbought in the short term, no negative signals are currently evident. Today, the S&P 500 is likely to open 0.1% higher, potentially moving sideways following its recent rally.
Investor sentiment has recently improved, as reflected in last Wednesday’s AAII Investor Sentiment Survey, which reported that 29.4% of individual investors are bullish, while 51.5% are bearish.
The S&P 500 index is set to open above yesterday's levels, continuing its retracement of the decline from February's record high. Key resistance is at the 5,900-6,000 level.
S&P 500 Futures Contract: Breaking Higher
This morning, the S&P 500 futures contract approached the 5,900 level, extending its short-term uptrend. This move added gains to my subscribers’ long positions in the S&P 500.
Yesterday, I noted “This technical breakout, fueled by the weekend's trade agreement, opens the door to potential moves toward 5,900-6,000.” This proved correct.
However, some profit-taking could follow the initial surge. Support is currently near 5,800, marked by recent local lows.
Conclusion
The S&P 500 is building on yesterday's momentum following the significant de-escalation in U.S.-China trade tensions. Both nations have dramatically reduced tariffs (U.S. to 30% from 145%, China to 10% from 125%) and agreed to a 90-day pause on increases.
Here’s the breakdown:
- Today's CPI data came in slightly lower than expected at +0.2% m/m, further supporting equity markets.
- S&P 500 broke above a week-long consolidation, reaching its highest since March 5.
The full version of today’s analysis - today’s Stock Trading Alert - includes the additional stock trading ideas and the current S&P 500 position. I encourage you to subscribe and read the details today (with a single-time 7-day free trial). Stock Trading Alerts are also a part of our Diamond Package that includes Gold Trading Alerts and Oil Trading Alerts.
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Thank you.
Paul Rejczak
Stock Trading Strategist
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