The S&P has managed to eventually surpass the $4000 level amidst impressive economic data being released. The Dow Jones has also seen bullish momentum bringing it ever closer to that $34,000 psychological level with building risk appetite playing a factor.
Should economic data continue to impress, this could be enough of a catalyst to trigger a continuation across US Indices. Last week brought us NFP which provided us with an optimistic outlook on the US economy alongside Consumer Confidence. The consensus seems that the US economy is slowly growing and going back to normal with some extra help from President Biden’s $1.9 trillion stimulus relief package.
Although US indices might have stumbled going into the end of Q1, the overall theme seems positive. With inflation still being a hot topic, rising yields are still a threat to the stock market. With NASDAQ being so tech heavy, the losses seen there will greatly outpace that of the S&P and Dow, with the latter being well-positioned for Biden’s Infrastructure Bill. For the week ahead, we have already seen positive ISM data boosting investor confidence. Investors will be eyeing data from Initial Jobless Claims as well as PPI to gain a clearer picture on where the economy could potentially be going.
Consolidation is healthy amidst broader uptrends. Pullbacks are inevitable even though the stock market is designed to grow and go up. For the S&P specifically, the crack of $4000 does indeed open the door for a new leg to be formed to the upside pending a pullback. Price is continually making Higher Highs and Higher Lows in the bigger scheme of things showing us that bullish momentum is still very much prevalent. It’s time to exercise patience as we await pullbacks in price into one of our marked out technical levels such as our ascending trendline stemming from swing lows from November and March respectively. The psychological level of $3950 could also provide price with a region of support to take price higher.
Technically, the Dow has been showing us similar signs of bullish momentum. As previously mentioned, pullbacks in price is normal and healthy before seeing price create a new leg. In the case of the Dow, pullbacks are bound to happen as well. We could look at the Prior All Time High as the first region where price could run into some form of support. Should we break this, the next level to keep an eye out for would be the psychological level of $33,000.
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