Buy This Bargain Before It's Gone

In early October 2023, we updated our previous forecast for the SPDR S&P 500 ETF Trust for the current year. Its price, after a short-term breakthrough of the triangle pattern (marked as (A)-(B)-(C)-(D)-(E)), returned above its lower border, and a new upward trend began despite the intensification of geopolitical tensions in the world, mainly due to the Hamas war against Israel.

On the other hand, in mid-November, US inflation data was released, which demonstrated the effectiveness of the Fed's policy. So, the consumer price index (CPI) rose by 3.2% for the 12 months ending in October, one of the lowest values in recent years.


The sharp decline in this indicator was primarily due to a significant decrease in prices for both energy and used cars and trucks.

Ultimately, these data triggered a short squeeze on government bonds, which had a positive impact on the stock market. Currently, on the daily timeframe (1D) of the SPDR S&P 500 ETF Trust, a gap has formed in the price range from $441 to $446, which, according to our estimates, will be closed in the next 1-2 weeks.

On a more global scale

Thanks to positive macroeconomic data released by government agencies in the US and European Union and lower oil prices in recent weeks, the likelihood of the Fed cutting interest rates in early 2024 has increased sharply.

We believe that the decline in 2-year Treasury yield will continue in the near future, which will also support the continued momentum of the SPDR S&P 500 ETF Trust. Moreover, financial market participants should pay closer attention to changes in the yield curve, which is becoming increasingly important and one of the most accurate fundamental tools for predicting changes in sentiment on Wall Street.

As soon as the 2-year Treasury rate approaches the 10-year Treasury rate, this will provoke investors and traders to exit long positions in bonds and more aggressively buy ETFs, shares of technology and pharmaceutical companies.

Conclusion

We believe the pace of the US economic recovery will continue to accelerate and expect the SPDR S&P 500 ETF Trust to reach $463-$464 by the end of 2024.


Analyst’s Disclosure:
This article may not take into account all the risks and catalysts for the stocks described in it. Any part of this analytical article is provided for informational purposes only, does not constitute an individual investment recommendation, investment idea, advice, offer to buy or sell securities, or other financial instruments. The completeness and accuracy of the information in the analytical article are not guaranteed. If any fundamental criteria or events change in the future, I do not assume any obligation to update this article.