Trade Of The Week: SPX500_m bulls charge to record highs

<p><strong>By <a href="http://investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a> </strong></p>
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<ul>
<li>S&amp;P500 hits all-time high</li>
</ul>
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<li>US earnings + key data in focus</li>
</ul>
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<li>Prices bullish for RSI overbought</li>
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<li>Key level of interest at 4798</li>
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<li>Can bulls maintain hunger for gains?</li>
</ul>
<h3>US equity bulls were back in action last Friday as optimism over expected Fed rate cuts and surging tech stocks pushed the SPX500_m to all-time highs!</h3>
<p><img fetchpriority="high" decoding="async" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user17/SPX500_mH4_1.png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="10aa9f29-2ffd-4f61-bbc3-1c1176ca879a" data-src="/s3-static/users/user17/SPX500_mH4_1.png" /></p>
<p><strong><em>Note: The SPX500_m tracks the underlying S&amp;P 500 index</em></strong></p>
<p>The index has not only topped the <strong>previous record set in January 2022</strong> but also confirmed that it has been in a <strong>bull market since the October 2022 low</strong>. When considering the <a href="https://www.forextime.com/market-analysis/week-ahead-spx500m-bulls-down-not-out">shaky start to the new year</a>, it looks like SPX500_m bulls have regained their mojo.</p>
<p>Taking a quick look at the technical picture, prices are firmly bullish on the daily charts. However, the <strong>Relative Strength Index (RSI) has hit 70</strong>, signalling that prices are heavily overbought.</p>
<p><img decoding="async" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user17/SPX500_mDaily_28.png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="f310282c-f7c9-4f26-8ccb-a02725b73ad6" data-src="/s3-static/users/user17/SPX500_mDaily_28.png" /></p>
<p>With all the above said, this could be a wild week for the SPX500_m due to technical and fundamental forces. Given how prices are trading at record highs, the key question is whether bulls can maintain their hunger for more gains.</p>
<p><strong>Here are 3 key factors that could influence the index:</strong></p>
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<h3>US earnings season</h3>
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<p>US earnings season is in full swing with some of the largest companies in the world publishing their quarterly results.</p>
<p>The likes of<strong> Netflix, Tesla, Intel, and Visa among other companies listed in the S&amp;P500</strong> will be under the spotlight over the next few days. Both <strong>Netflix and Tesla</strong> are expected to report record quarterly revenues which could provide fresh support to the index. <strong>Intel </strong>is forecast to post its first revenue and profit growth in almost two years while <strong>Visa’s</strong> revenue could be supported by a better-than-expected holiday season.</p>
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<li><strong>The SPX500_m could push higher</strong> if overall earnings exceed market expectations.</li>
<li>If earnings disappoint, <strong>the SPX500_m could trade lower.</strong></li>
</ul>
<ol start="2">
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<h3>Key US data</h3>
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<p>The string of incoming key US data may influence expectations around Fed rate cuts – ultimately impacting the <strong>SPX500_m which has a handful of tech stocks.</strong></p>
<p>All eyes will be on the <strong>Q4 GDP figures, PMIs, and latest PCE report </strong>for fresh insight into the health of the largest economy in the world. The US economy is expected to have expanded by 1.9% in Q4 while the Core Personal Consumption Expenditure is forecast to cool 3% in December vs 3.2% in the prior month. Given the market sensitivity to Fed cut expectations, the US data could translate to increased market volatility this week.</p>
<ul>
<li>Should overall US economic data fuel speculation around Fed rate cuts, <strong>this could push the SPX500_m higher.</strong></li>
<li>A set of strong reports and hotter-than-expected inflation figures may dampen hopes on early Fed rate cuts, <strong>dragging the SPX500_m lower.</strong></li>
</ul>
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<h3>Technical forces</h3>
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<p>The SPX500_m is firmly bullish on the daily charts as there have been consistently higher highs and higher lows. <strong>Prices are trading above the 50, 100, and 200-day SMA </strong>while the MACD trades above zero. Although bulls are in a position of power, <strong>the RSI signals that prices are heavily overbought </strong>– suggesting a potential throwback down the road.</p>
<ul>
<li>The current upside momentum could take prices towards the <strong>next round psychological level at 4900.</strong></li>
<li>Should prices slip back below the<strong> 4798</strong> dynamic support, <strong>this could open a path back towards 4700.</strong></li>
</ul>
<p><img decoding="async" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user17/SPX500_mDaily2_3.png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="40862dd8-56de-4c6e-b094-56688cf6a25d" data-src="/s3-static/users/user17/SPX500_mDaily2_3.png" /></p>
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<p><img loading="lazy" decoding="async" class="size-full wp-image-54242 alignleft" src="https://www.investmacro.com/articles-analysis/wp-content/uploads/2014/07/Forex-Time-Logo.png" alt="Forex-Time-Logo" width="262" height="90" /><strong>Article by <span><a href="https://www.investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a></span></strong></p>
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