S&P 500 Short: Fundamental and Technical
The S&P 500 index is breaking all time highs every week. However, it looks set for a fall.
Fundamental: The US economy is strong. NFP was healthy, and whilst GDP missed on expectations, the FOMC's last statement was hawkish. In the medium term, the Federal Reserve should raise interest rates, which should put pressure on the global stock market.
Technical: The weekly and monthly charts are showing strong divergence. On the weekly chart, the S&P 500 has been outside an 800-period BB for months. On the monthly chart, there is strong divergence which historically points to a long overdue, deep correction in the stock market.
In the short term, the index may test 2200.
However, in the medium to long term, it is due for a correction, perhaps to the 1900 level (a missed monthly pivot).
Furthermore, a break below 1800 (recent support from January 2016) should open the doors for a further decline.
Fundamental: The US economy is strong. NFP was healthy, and whilst GDP missed on expectations, the FOMC's last statement was hawkish. In the medium term, the Federal Reserve should raise interest rates, which should put pressure on the global stock market.
Technical: The weekly and monthly charts are showing strong divergence. On the weekly chart, the S&P 500 has been outside an 800-period BB for months. On the monthly chart, there is strong divergence which historically points to a long overdue, deep correction in the stock market.
In the short term, the index may test 2200.
However, in the medium to long term, it is due for a correction, perhaps to the 1900 level (a missed monthly pivot).
Furthermore, a break below 1800 (recent support from January 2016) should open the doors for a further decline.
Comment:
On Friday, the SPX closed down at 2123. The next interim target is the 2000 level, however, how long it takes to get there is unpredictable.