S&P 500: Bulls in Wait-and-See Mode, but Overall Trend Still Favors Upside

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S&P 500: Bulls in Wait-and-See Mode, but Overall Trend Still Favors Upside

Global markets were trading a little on the defensive first thing this Thursday morning. Investor enthusiasm faded a little after a strong Wall Street rally earlier in the week, when news of the US-China trade truce trigged a big rally across the global stock markets. equity futures were down about 0.44% this morning, while the , which had been riding high on chipmaker strength and trade optimism, also eased off, along with European indices.

However, this remains a “dip-buying” market, and with major indices making significant progress in recent weeks, the path of least resistance is still clearly to the upside. I would therefore expect a resumption of the bullish trend, possibly as early as later today, unless some major bearish catalyst comes into play.

What to Watch Out for Today?

Well, the economic calendar is quite busy today, which could help support the recovery if we don’t see any further stagflation signs. We have already had stronger-than-expected from the *** (+0.7% q/q vs. +0.6% q/q expected) this morning, while from the eurozone (+0.3% q/q vs. +0.1%) and data (+2.6% m/m vs. +1.9% expected) both topped expectations although was a little on the softer side (+0.3% q/q vs. +0.4% q/q).

Today’s US data dump — including , , , and the Empire State and Philly Fed manufacturing indices — looms large. With sentiment largely positive, any positive surprises in the data could lead to renewed optimism.

Judging by weaker US index futures, it looked like investors were not in a hurry or otherwise unwilling to extend risk exposure ahead of these releases, marking a subtle shift from the aggressive dip-buying seen earlier in the week.

Will AI Optimism Continue to Support Markets?

After the likes of Nvidia (NASDAQ:) and Advanced Micro Devices (NASDAQ:) helped lead tech stocks higher on Tuesday thanks to AI deals in the Middle East, the momentum has tempered somewhat with many tech names finding themselves in the red in pre-market trading.

That said, the recent trend for the sector has been positive and with gross shorts on Nasdaq futures having been reduced last week, traders are hesitant to bet against tech. There is also the possibility of foreign investment pouring back into US tech names now that we have a much calmer macro backdrop.

For now, the Nasdaq 100 forecast remains tilted to the upside, but with the caveat that near-term consolidation is probable. Traders may want to wait for pullbacks to key support levels before reloading long positions.

Meanwhile, the pullback in tech coincides with oil prices falling — has dropped to $64 after President Trump claimed the US is nearing a nuclear deal with Iran, raising the prospect of increased oil supply. also fell, suggesting the risk-off tone is not wholesale, but rather selective.

Technical Picture Still Bullish for S&P 500

Technically, the S&P 500 remains in an uptrend. After recovering more than 20% from its April lows, the index has firmly reclaimed moving averages and cleared several prior resistance zones. The recent buying has lifted the daily RSI to flirt with overbought territory of 70.

While a cooling-off phase wouldn’t be entirely surprising, the breakaway rally from the weekend gap suggests the bears continue to be the trapped traders and we may instead see the market continue to squeeze this group of market players. Thus, a quick resumption of the bullish trend heading towards the business end of the week is something I would be expecting to see, than a correction first.

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Key Levels to Watch

Immediate support lies in around 5876 on the S&P 500 futures daily chart. This level marks the high from Monday, when the index broke firmly above old resistance of 5873, which will now be the next key support level to watch should we see a slightly deeper dip.

Below that, the 5678 – 5721 zone — a former resistance area where we also have the bullish trend line and 21-day exponential moving average convergence – is now the most important support area to watch. A retest could attract fresh buyers, especially if today’s data doesn’t derail the soft-landing narrative.

On the upside, potential resistance looms around 6,000 — a psychological level and the last major support before the start of the sell-off that began in February. Above it, the all-time high at 6166 is the next bullish target and beyond that is clear blue skies.

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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.

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#Bulls #WaitandSee #Mode #Trend #Favors #Upside

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