Index Creeps Towards 4000 Mark, Can it Break Increased?

S&P 500 Worth Outlook:

S&P 500 Forecast: Index Creeps Towards 4000 Mark, Can it Break Increased?

The S&P 500 is mere factors away from breaking the 4,000 mark for the primary time in historical past, an occasion that may be fairly vital given latest market turbulence. The unraveling of Invoice Hwang’s Archegos household workplace noticed some shares crash as dangerous leveraged bets have been unwound and monetary establishments have been left to foot the invoice.

Regardless of rising situations of monetary instability, the broader S&P 500 and Dow Jones indices commerce round all-time highs because the Nasdaq 100 negotiates the continuing reflation commerce. With sentiment intact forward of Friday’s non-farm payrolls report and additional perception on President Biden’s infrastructure plan, the S&P 500 could lengthen increased if it may break 4,000 as soon as and for all.

S&P 500 Worth Chart: 1 – Hour Time Body (November 2020 – March 2021)

To that finish, resistance is extremely sparse apart from the 4,000 mark which instructions respect purely from a psychological standpoint. That mentioned, psychological ranges, notably these located at a spherical quantity, exist for a motive as they’ll typically denote an space the place targets or stops are set that may see worth speed up or stall upon method. Both approach, the extent serves as a close-by “line within the sand” to the topside that might open the door to an extension increased ought to bulls break above.

With that in thoughts, IG shopper sentiment knowledge reveals retail merchants are overwhelming net-short the S&P 500 with a drastic decline in lengthy publicity simply final week. Prior shifts in retail publicity to that diploma, like early January and early February, noticed a subsequent surge within the index though previous efficiency will not be indicative of future outcomes. Since we usually take a contrarian view to crowd sentiment, IGCS knowledge would possibly counsel the S&P 500 might push increased.

Additional nonetheless, there may be seasonality to think about as April is traditionally one of many months wherein the S&P 500 performs greatest. Within the final 30 years particularly, it boasts the perfect month-to-month efficiency on common. Nonetheless, the week is full of occasion threat and liquidity could dry up forward of the buying and selling vacation this Friday. Thus whereas there are causes to be bullish, persistence is likely to be rewarded till after the looming occasion threat has handed.

Advisable by Peter Hanks

Weekly Inventory Market Outlook

Register for webinar

Be a part of now

Webinar has ended

–Written by Peter Hanks, Strategist for DailyFX.com

Contact and observe Peter on Twitter @PeterHanksFX