S&P 500: Critical Levels Point to Potential Pullback

The S&P 500’s Post-Election Rally Faces Resistance Amid Overbought Conditions

In the aftermath of Trump’s victory in the US presidential election, the S&P 500 has experienced a strong rally, maintaining its upward trajectory while global indices have been more volatile. Concerns about tariffs and the potential for US monetary policy to remain restrictive in the future have contributed to this volatility.

Market Overview:

• Index futures were steady ahead of the release of PPI inflation data.
• APAC stocks had a bearish session following Wall Street’s lead.
• European markets saw a drop the day before.

  Investor Sentiment:

• US stock investors have largely ignored weakness in global markets, commodities, and bonds.
• US 10-year Treasury yield approaching 4.5% amid hawkish rate repricing.
• Major US indices are currently at technically overbought levels.

  Key Events Today:

• PPI data release could impact bond yields and Fed’s preferred inflation gauge.
• Fed Chair Jerome Powell to speak on economic outlook and inflation trends.
• Market cautiously pricing in minimal easing by mid-2025.

  S&P 500 Futures Analysis:

• Market remains bullish post-election, with strong trust in Trump’s economic plans.
• Market is technically overbought, signaling potential for a pullback.
• Support levels at 5990, 595.00, 5893, 5927, and 5805 could be tested.
• Key support areas to watch for potential bounce-backs.

  Key Levels to Watch on SPY:

• SPDR S&P 500 ETF Trust (SPY) provides access to S&P 500 index.
• Support levels at 595.00, 586.12, and 576.74 could be tested.
• Look for bounce-back opportunities at these support levels.

  Conclusion:

• Market is at a critical juncture with potential for pullback amid overbought conditions.
• Investors should monitor key support zones for potential trading opportunities.
• Market sentiment hinges on upcoming economic data and Powell’s speech.

  ***Disclaimer:
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