S&P 500 at new medium-term highs – Is correction coming?

Paul Rejczak Gold Price Forecast

The S&P 500 accelerated its rally yesterday – will it continue even higher?

The broad stock market index gained 1.22% on Thursday as it further extended its uptrend after breaking above the previous local highs two weeks ago. The S&P 500 was the highest since April of 2022 again.

There is still a lot of uncertainty concerning monetary policy, some technology stocks’ valuation concerns, but overall, the investors’ sentiment is still bullish.

Stocks will likely open 0.2% higher this morning as investors’ sentiment remains bullish ahead of a long holiday weekend. The S&P 500 is trading above its month-long upward trend line and above a steeper short-term trend line as we can see on the daily chart:

Futures contract trades along new high

Let’s take a look at the hourly chart of the S&P 500 futures contract. It rallied up to around 4,485 level yesterday. Today it’s trading within a short-term consolidation. The resistance level is now at 4,500 and the support level is at 4,440, among others.

Conclusion

The S&P 500 index will likely open higher this morning. The market may fluctuate following its recent rally. There have been no confirmed negative signals so far. However, stocks may see a profit-taking action at some point.

Here’s the breakdown

The S&P 500 extended its rally as it broke above the 4,400 level yesterday.
There have been no confirmed negative signals so far.
In my opinion, the short-term outlook is bullish.

Want free follow-ups to the above article and details not available to 99%+ investors? Sign up to our free newsletter today!

Author

Paul Rejczak

Gold Price Forecast

Paul Rejczak is a stock market strategist who has been known for the quality of his technical and fundamental analysis since the late nineties.

AUD/USD defies gravity; focus is back to 0.7000

AUD/USD has maintained its bid bias around 0.6970 ahead of the opening bell in Asia on Tuesday. The pair has added to Friday’s rebound, retargeting the 0.7000 hurdle despite another day of firm gains in the Greenback. Looking ahead, Westpac will publish its Consumer Confidence gauge on the domestic calendar.

USD/JPY retakes 158.00 amid hawkish BoJ bets, firmer USD

USD/JPY erases losses and retakes 158.00 in the Asian session on Monday, trading within a one-week-old range. Geopolitical uncertainty continues to underpin the US Dollar, despite fading Fed rate hike hopes, supporting the pair's rebound. However, further upside could be capped by hawkish BoJ expectations and looming intervention risks that could support the Japanese Yen.

Gold treads water around $4,150

Gold now regains some composure and approaches the $4,150 mark per troy ounce late on Monday. The precious metal’s vacillating price action comes in response to the persistent advance in the US Dollar in combination with the resurgence of the upside momentum in US Treasury yields across the curve.

Bitcoin and Gold Outlook: BTC slips, XAU downtrend persists as US Services PMI misses forecasts

Bitcoin (BTC) faces growing headwinds on Monday, as it trades lower below $86,000. Despite the ongoing pullback, the Crypto King remains in a broad range with the lower limit near $84,000 and the upper limit at $88,000. A break on either side of this zone would influence BTC's direction. Gold (XAU/USD), meanwhile, retains a dominant bearish outlook as price action continues downward toward $4,100.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.