S&P 500 weekly technical outlook 30th April 2024

Last week, we suggested that the index was more likely to recover towards 5,200 than continue the recent slide, so the minor recovery in the past few days has been largely in line with expectations.

There were some minor concerns last week on bad GDP data, and of course we had sizable moves lower from heavyweights such as Nvidia and Meta.

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However the wider market held last week’s lows and buyers moved back in with enough scale to lift the markets once more. With strong trends of this nature the buying and selling rarely turns off like a tap, instead if it turns it turns with the pace and grace of an oil tanker. We have seen heavy buying interest for the past few months and the recent minor sell-off is likely to appear as just too attractive an opportunity to miss for many of these buyers.

The longer term bearish arguments do continue to mount up: Inflation resurfacing, higher personal debt, slower GDP growth, inverted yield curve, sluggish personal spending, but so far these significant red flags have not been enough to dent the wider bullish sentiment.

As a result we maintain last week’s view that 5,200 remains on track. In order to turn negative, last week’s lows will need to be broken, and even then more evidence that the underlying economy was struggling would be needed to suggest that the longer term buying interest was finally running out of steam, else this could just be seen as yet another buying opportunity. Leaving a positive outlook for the index overall next week, with moves under 4950 needed to turn more negative.

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