SPX: no limits?

During the previous week the S&P 500 reached its new all time highest values by hitting 5.100. Tech companies were again the ones which were driving equity markets to the higher grounds. NVDA was the most discussed stock during the previous week, as its results show continuously strong performance. As per latest published results for Q4, Nvidia`s revenues were higher by 265% on a yearly basis. The surge in revenues of $22.10 billion outperformed forecasts of $20.6 billion. During the week, the price of this company surged, bringing the company to a total capitalization of above $2 trillion on Friday. At these levels of the S&P 500 there are analysts who are questioning whether such a strong move during the previous and this year is sustainable, as it poses the risks that tech companies might be strongly overvalued at this moment. Still, the market continues to react to the positive quarterly results of tech companies with a strong buy sentiment.

Since the end of the previous year the S&P 500 is moving within a strongly overbought momentum. This is not at all an usual situation on equity markets. Also, some analysts are pointing to a broken negative correlation between the 2Y US Treasuries and movement of the S&P 500, which was in place for at least the last 30 years. Since last year, this correlation has been broken, and currently there is a positive correlation between two variables. As long as investors are ready to strongly support companies within the tech industry, it seems like the S&P 500 will move further without limits.