The S&P 500 index has pulled back after staging a strong comeback last week. It dropped by 11 points on Monday and has shed another 10 points in the futures market. The same trend has been seen in the SPDR S&P ETF (SPY) and Vanguard S&P ETF (VOO). Other American indices like the Dow Jones and Nasdaq 100 have all pulled back.
The S&P 500 index had a strong performance last week as American stocks bounced back. This performance is not being repeated this week as some investors take profit. They are also waiting for a catalyst that will push the index higher.
The first important news that will move the index was the strong results by Nike. The company published strong quarterly results even as business conditions worsened. Its direct sales to customers jumped by 7% to $4.8 billion while its total revenue dropped by 1%. As a result, the firm announced a new four-year $18 billion share buyback to replace the existing $15 billion that will end in the next fiscal year.
The other important S&P 500 news is the upcoming US consumer confidence data that comes out on Tuesday. Analysts expect the data to show that confidence slipped sharply last month as inflation rose. This is an important number because of the role that American consumers play in the economy. The Fed will likely consider the confidence data when making its decision.
The SPY and VOO ETFs will also react to the upcoming earnings by McMcormic, Paychex, and General Mills. General Mills will be watched closely because of the recent surge in soft commodity prices like corn and soybeans.
Meanwhile, the fear and greed index has continued to pull back, which is a positive aspect for the S&P 500. The index currently stands at 29, which is higher than last week’s 21. Most of the improvements have come from put and call options and VIX, which have moved back to the neutral point.
The four-hour chart shows that the S&P 500 index has bounced back lately. It has managed to move above the important resistance point at $3,816, which was the lowest point on May 20th. The index is between the 25-day and 50-day moving averages while the Stochastic Oscillator has moved above the overbought point.
Therefore, the outlook for the index is bullish, with the short-term target being at $4,115, which was the lowest level on February 24th. A drop below the support at $3,816 will invalidate the bullish view.
As shown below, my outlook is in line with that of our S&R indicator. The indicator, which has over 90% accuracy, can be installed in any MT4 and MT5 software.
This post was last modified on %s = human-readable time difference 07:29