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Index Creeps Toward 4000 Mark, Can it Break Higher?

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S&P 500 Worth Outlook:

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

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

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Regardless of rising cases of economic instability, the broader S&P 500 and Dow Jones indices commerce round all-time highs because the Nasdaq 100 negotiates the continued 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 might prolong greater if it might probably break 4,000 as soon as and for all.

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

S&P 500 price chart

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

S&P 500 price chart and sentiment data

With that in thoughts, IG shopper sentiment information 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 just isn’t indicative of future outcomes. Since we sometimes take a contrarian view to crowd sentiment, IGCS information would possibly counsel the S&P 500 might push greater.

S&P 500 price and seasonality

Additional nonetheless, there’s seasonality to contemplate as April is traditionally one of many months during which 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 might dry up forward of the buying and selling vacation this Friday. Thus whereas there are causes to be bullish, endurance may be rewarded till after the looming occasion threat has handed.

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–Written by Peter Hanks, Strategist for DailyFX.com

Contact and observe Peter on Twitter @PeterHanksFX

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