Analysis | Is the S&P 500 bear market coming to an end?
After bottoming out in mid-October 2022, the S&P 500 index, which includes the 500 largest US companies, managed to recover some of the losses. Looking at the daily chart of the instrument, we can't help but notice an interesting technical situation - the “golden crossing” which took shape this week.
What is “Golden Crossing“?
The golden cross is a widely used indicator among market participants to determine long-term trends in the price of an instrument. It is based on the intersection of the 50-day and 200-day moving averages. From the point of view of technical analysis, many market experts define the crossing of these two lines as the beginning of a new movement.
This week we saw the 50-day moving average cross above the 200-day. According to some analysts, this crossing is an early signal of a reversal of the trend and the beginning of a new upward movement.
What is the cause of the rise in the S&P 500?
From a fundamental analysis perspective, the main driver of the rally in the index was the inflation data. In recent months, we have seen a slowdown in consumer price growth in the US. And this, in turn, leads investors to believe that the Federal Reserve is already nearing the end of its monetary policy tightening cycle.
Yesterday (February 1), the two-day meeting of the Fed ended, which was also the first for this year. The central bank slowed down the pace of interest rate hikes, raising them by 0.25% (as expected by the markets).
During the press conference, Fed Chairman Jerome Powell said that several more hikes of 0.25% are on the way. What is new here is that central bankers will shift their focus more to economic data in order to assess how interest rate hikes affect economic activity and the level of employment. And this is a subtle hint that the rate-hiking cycle may indeed be coming to an end.
BenchMark Short-Term Customer Sentiments
When we talk about short-term movements, however, expectations for the S&P 500 are for a downward movement. Benchmark's market sentiment chart, which reflects short-term sentiment among clients, shows that 69% expect a near-term decline and 31% expect an increase.
The data is based on actually concluded transactions in BenchMark's MetaTrader platform as of 3:00 p.m. on February 2, 2023
You will find more indicators with market statistics developed specifically for BenchMark clients after logging in to the Portal for real clients.
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