Fundamental Overview

The S&P 500 is slowly crawling back to the all-time high. The market continues to look forward to the next year with Trump’s policies being a positive driver for growth.

The only bearish reason we had for the stock market was the rise in Treasury yields. That’s generally bearish only when the Fed is tightening policy though not when yields rise on positive growth expectations.

Right now, the Fed’s reaction function is that a strong economy would warrant an earlier pause in the easing cycle and not a tightening. That should still be supportive for the stock market in the bigger picture.

If the Fed’s reaction function were to change to a potential tightening, then that will likely trigger a big correction in the stock market on expected economic slowdown. For now, the pullbacks look as something healthy and opportunities to buy the dips.

S&P 500 Technical Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500 recovered all the losses and it’s now back near the all-time high. The buyers will want to see the price breaking higher to increase the bullish bets into new highs. The sellers, on the other hand, will likely step in around these levels to position for a drop back into the major trendline around the 5900 level.

S&P 500 Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have another minor upward trendline defining the current bullish momentum. The buyers will likely keep on leaning on it to position for new highs, while the sellers will look for a break lower to increase the bearish bets into the major trendline.

S&P 500 Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we are having a pretty slow and choppy price action these days due to the holidays. This could lead to fake breakouts due to the intraday noise. The sellers will want to see the price falling below the higher low around the 6017 level to start targeting new lows, while the buyers will likely pile in around these levels to position for a rally into a new all-time high. The red lines define the average daily range for today.