Summary: US Indices resumed uptrend Friday lifted by huge jump in large caps. Technical patterns are indicating higher Index levels while Indicators are sending mixed signals. The trend is your friend - for now.
The S&P 500 forgot all about being in correction mode and propelled higher on Friday, lifted mainly by Meta, Amazon and Nvidia.
The uptrend has resumed but RSI divergence persists, i.e. the strength indicator is not fully supporting the bullish trend. However, the trend is your friend and divergence can be traded out.
The S&P 500 could test 5K, possibly spiking to the 4,110 level, but for RSI divergence to cancel out the RSI will need to close above its upper falling trendline.
However, on the weekly chart there is no RSI divergence suggesting S&P 500 can move higher in coming weeks.
One could argue that the weekly chart of S&P 500 has formed a Cup and Handle behaviour. The Cup (from Q12022 through Q3 2023) should be more rounded to form a textbook pattern. However, the behaviour has been there and the Handle is quite visible.
A potential price target based on a cup and Handle pattern is 5,722. However, since the pattern is not of high quality and based on statistics, the price meeting target is more likely to be around 0.618 at 5,296 (Bulkowski thepatternsite.com has calculated it to be 61% of the bottom of the Cup to top of the Cup)
A close below 4,682 will demolish the bullish scenario. The first indication of that could be S&P500 closing below 4,854 combined with an RSI close below its lower slightly rising trendline thereby also closing below 60 threshold.
Author: Kim Cramer Larsson, Technical Analyst, Saxo Bank
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The S&P 500 forgot all about being in correction mode and propelled higher on Friday, lifted mainly by Meta, Amazon and Nvidia.
The uptrend has resumed but RSI divergence persists, i.e. the strength indicator is not fully supporting the bullish trend. However, the trend is your friend and divergence can be traded out.
The S&P 500 could test 5K, possibly spiking to the 4,110 level, but for RSI divergence to cancel out the RSI will need to close above its upper falling trendline.
However, on the weekly chart there is no RSI divergence suggesting S&P 500 can move higher in coming weeks.
One could argue that the weekly chart of S&P 500 has formed a Cup and Handle behaviour. The Cup (from Q12022 through Q3 2023) should be more rounded to form a textbook pattern. However, the behaviour has been there and the Handle is quite visible.
A potential price target based on a cup and Handle pattern is 5,722. However, since the pattern is not of high quality and based on statistics, the price meeting target is more likely to be around 0.618 at 5,296 (Bulkowski thepatternsite.com has calculated it to be 61% of the bottom of the Cup to top of the Cup)
A close below 4,682 will demolish the bullish scenario. The first indication of that could be S&P500 closing below 4,854 combined with an RSI close below its lower slightly rising trendline thereby also closing below 60 threshold.
Author: Kim Cramer Larsson, Technical Analyst, Saxo Bank
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.