What’s Next for the S&P 500 After New Bullish Levels?

S&P 500 Holds Strong Despite Early Pullback

The SPDR S&P 500 ETF Trust (ASX: SPY) has managed to hold firm despite a discouraging start to 2024. The index is currently trading less than 1% below its December 28 high of $477.55, indicating resilience in the market. This positive trend is further reinforced by the fact that the ETF has not fallen anywhere close to its 50-day moving average, suggesting that investor confidence is still intact. The recent rally on January 8, led by stocks such as American Airlines, Arista Networks, Nvidia Corp., Advanced Micro Devices, and Fortinet, has also helped push the index back above its 5-day and 10-day moving averages.

Favorable Indicators: Nvidia and Eli Lilly Show Investor Conviction

Two stocks that provide favorable indicators of investor conviction are Nvidia and Eli Lilly. Nvidia, the 2023 leader, recently broke out of a consolidation phase and cleared a flat base that began in November. The stock’s upward price action on January 8 was accompanied by heavy trading volume, indicating that investors still have a strong interest in the company. Eli Lilly and Company, on the other hand, did not succumb to the market’s pullback in early January. Investors continue to show interest in the company’s weight loss and diabetes treatments, as reflected by the stock’s performance remaining in the buy range below a January 4 high of $636.41.

Uncertainty Looms: Geopolitical Events and Earnings Could Impact Market

Although the market has held strong so far, uncertainty still looms ahead. Geopolitical events, upcoming earnings releases, economic or interest-rate news, and market sentiment all have the potential to impact stocks in either a positive or negative direction. It is important for investors to stay vigilant and monitor these factors closely as they could influence the broader market’s action and cause either breakouts or breakdowns.

Nasdaq 100 Finds Support, Signals Potential Breakouts or Breakdowns

The Nasdaq 100, represented by the Invesco QQQ Trust (NASDAQ: QQQ), has been finding broad support above a key level. This is an encouraging sign, as it indicates that institutional investors are not inclined towards selling off at the moment. The chart of the QQQ shows the top of the Nasdaq’s correction between July and September, which is currently acting as support. It suggests that the market is still optimistic, despite the potential for volatility in the near term. However, it’s important to remain cautious, as the market can be influenced by various factors that can either lead to breakouts or breakdowns.

Promising Leaders: Nvidia, Eli Lilly, and Snowflake Show Strength and Potential

In addition to being favorable indicators of investor conviction, Nvidia and Eli Lilly are also part of a group of promising leaders in the market. Another stock that shows strength and potential is Snowflake Inc. Snowflake, which went public in 2020, has a three-year revenue growth rate of 77%, putting it in the category of a young fast mover. The stock recently bounced off its 50-day moving average, indicating resilience and potential for future market action. The overall performance of these leaders, especially in the technology sector, is crucial as it can significantly contribute to broader market gains.

As the market continues to navigate through various uncertainties, investors should remain cautious and stay attuned to key market indicators. While the S&P 500 has held strong and stocks like Nvidia, Eli Lilly, and Snowflake show promise, ongoing events and quarterly earnings reports could shape the direction of the market in the coming weeks. It is essential for investors to conduct thorough research and exercise prudence when making investment decisions to navigate the ever-changing market landscape.