S&P 500 hits resistance, BTIG sees potential for a pullback

BTIG analysts offered insights into the latest inventory market actions, observing that the S&P 500 Index (SPX) has returned to the downtrend line from its all-time highs. After a difficult finish to 2024, market bulls have regained some floor, however BTIG cautions that the index may initially retreat from its present place.

A decisive shut above roughly 6025 factors may sign a transfer in the direction of testing the all-time excessive of round 6100 factors, analysts led by Jonathan Krinsky mentioned in a word.

Conversely, a failure to keep up this stage may end in a retest of the earlier week’s lows close to 5830 factors.

The analysts famous that whereas the U.S. greenback’s rise has paused, bond markets stay weak, posing a big danger in case of an uptick in bond yields. The semiconductor sector, represented by the Semiconductor ETF (SMH), is trying to interrupt out of a latest buying and selling vary and fill a value hole left from July of final 12 months.

Nevertheless, there may be hypothesis that the upcoming keynote speech by Jensen Huang on the Shopper Electronics Present (CES) may set off a ‘promote the information’ occasion.

When it comes to the tech-heavy Nasdaq 100 Index (QQQ), BTIG factors out that it’s retesting a beforehand damaged trendline from the August lows and has seemingly damaged out of the downtrend from latest highs. Nonetheless, they counsel that if the bears are to make a stand, it could doubtless be at present ranges.

Small-cap shares have additionally returned to a resistance stage, with BTIG indicating {that a} transfer above roughly 226 factors can be a constructive growth for the phase. In the meantime, the 30-year actual rates of interest have reached new cycle highs, approaching the peaks seen in late 2023.

This fee improve has been a problem primarily for particular market sectors, however there may be concern about how an additional rise above 2.60% may have an effect on large-cap shares. The analysts additionally observe that the iShares 20+ 12 months Treasury Bond ETF (NASDAQ:TLT) is transferring in the direction of its November 2023 hole of 85.12.

The U.S. Greenback Index (DXY) exhibits indicators of a possible reversal, which BTIG views as a constructive signal, however they consider it must fall under roughly 107 to substantiate a peak. Lastly, the supplies sector has seen a modest restoration following traditionally oversold situations and a pullback within the greenback.

Nevertheless, the restoration has been minimal, and BTIG expresses a cautious outlook, anticipating a counter-trend transfer upwards however acknowledging that the sector is testing their persistence.

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