The S&P 500 has retraced the majority of December 2022’s losses and tested 4,000 again in the middle of January. Traders have generally considered the same factors noted above for Microsoft (NASDAQ:MSFT), since MSFT is the second constituent of the index by weight and most of the top 10 constituents are tech companies which usually move for the same reasons.
‘The decent recovery by many tech shares so far this month has supported the S&P 500 and other indices,’ said Michael Stark at Exness. ‘In the longer term this year, the picture is lukewarm or at least less bad than 2022, but volatility this low might suggest complacency. The VIX at 20 is around its lowest since late 2021, a possible signal of correction in the context of mixed fundamentals.’
On the chart, it seems likely that the price can move back to the value area between the 50 and 200 SMAs within the next couple of weeks. There’s a clear overbought signal from the slow stochastic and, historically, indices tend to move down after earnings season unless the results are exceptionally strong. However, a break below the 200 SMA is unfavourable because five daily closes above there would usually suggest that the price has accepted the current area.
‘The decent recovery by many tech shares so far this month has supported the S&P 500 and other indices,’ said Michael Stark at Exness. ‘In the longer term this year, the picture is lukewarm or at least less bad than 2022, but volatility this low might suggest complacency. The VIX at 20 is around its lowest since late 2021, a possible signal of correction in the context of mixed fundamentals.’
On the chart, it seems likely that the price can move back to the value area between the 50 and 200 SMAs within the next couple of weeks. There’s a clear overbought signal from the slow stochastic and, historically, indices tend to move down after earnings season unless the results are exceptionally strong. However, a break below the 200 SMA is unfavourable because five daily closes above there would usually suggest that the price has accepted the current area.