S&P 500 Technical Analysis: The recent price action is a strong bullish signal
- 15 November 2022
- Posted by: Federica Montella
- Categories: eToro CopyTrader, Investing
S&P 500 Technical Analysis – Daily Chart
The S&P 500 price is trading inside an ascending channel.
After moving above the upper channel line, the price is right now exactly at the resistance level.
The positive price action of the last few days is a result of the release of the US CPI inflation data that increased less than expected (7.7% vs. 8% expected).
The Nasdaq and the Dow Jones indices have also been moving higher after the news because investors believe that inflation might have peaked and the FED will slow down the pace of rate hikes in the coming months.
This is still not confirmed and I think the FED will keep increasing the interest rates as the inflation is still very high, so I remain cautious for the time being.
On the technical side, the recent price action is a strong bullish signal, for the short term.
The price also broke above the 21-day MA (blue moving average) and above the 50-day MA (red moving average). This is also bullish.
However, we are approaching the 200-day MA (green moving average), at around level 4063, which could act as a resistance level, so we are not out of the woods yet.
In summary, in the short term the trend flipped bullish, but long term (months), the trend is still bearish.
If the price can break above the 200-day MA, it would be a very bullish signal that will push prices even higher.
A failed test of the 200-day MA, instead, will push prices lower, first to the support line at 3908 and then potentially to the bottom of the channel at around 3800.
The RSI is in Bullish mode: 60
Market Sentiment – Fear & Greed Index
The market sentiment remains in the “Greed” mode, at 69, higher than yesterday.
As mentioned, investors believe that the worst is over, inflation peaked and the FED will pivot soon.
They were just expecting good news to start buying again.
If the sentiment remains high, we can expect higher prices in the upcoming days.
In my opinion, we should be careful. I think we haven’t reached the bottom of the market yet.
FedWatch Tool – FED rates probabilities
80.6% of investors are expecting the FED to increase the interest rates by 0.50% in the next meeting.
The remaining 19.4% are expecting a 0.75% rate increase.
No other options are considered at this stage.
The next FED meeting is on 14 December 2022.
Portfolio Update
Overall, the majority of my positions are bullish (LONG). I have a few short positions opened recently that I am monitoring and waiting for the right time to close or I could add more shorts if the price reverts to the downside.
Right now I am neutral on the stock market, as the price can go in any direction in the short term.
I am keeping my risk score low and I have some cash available on balance to use for new trades.
If you are already copying my portfolio, please keep the copy open.
If you are thinking of copying me, now could be the right time, if you can invest for the long term (years).
Remember to copy the open trades to optimize the copy.
Remember to set the stop loss on the copy at the minimum level, so you don’t get stopped if there is a correction.
Thank you, everyone. Have a nice day!
Steps to follow to copy my portfolio automatically:
1. Create an eToro account here: https://federicamontella.com/go/etoro/
2. Verify your account and make a deposit of at least 200 USD (you can deposit in any currency, like GBP and EUR)
3. Go to my profile page: https://federicamontella.com/go/etoro-passionforprofit/
4. Start the copy (copy open trades and set the lowest stop loss possible, to allow some movement)
5. Enjoy, it’s all automatic. You will make passive income 24/7
Let me know if you have any questions.
Federica Montella
eToro Popular Investor
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