Will Technical Resistance Become Support for the S&P 500?
We're enjoying the market melt up, but mindful of what lies ahead. Here's how we're 'gaming things out.'
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While we enjoy Monday’s market rally and the larger move in the TheStreet Pro Portfolio, we have to recognize the S&P 500 is flirting with its 200-day moving average. Should it close above that line, which clocks in near 5752, and successfully test it in the next few days, there is potential for more upside ahead.
Looking at the 50-day and 100-day moving averages, that suggests potential near-term upside of around 3% for the S&P 500, which would be enough following Monday’s move to push it into positive territory on a year-to-date basis.
As we discussed in Monday’s Daily Rundown video, with the Flash March PMI data in hand, the next meaningful hard data will be the February Personal Income & Consumption data and the PCE Price Index later this week. We have less than a handful of earnings reports coming at us, and candidly none of them are of the caliber that will move the market.
What this means is the next few days are likely to be influenced by developments out of Washington as they relate to policy and tariffs.
While President Trump appears to be scaling back his April tariff salvo, the touting of April 2 as “Liberation Day” and the start of the “External Revenue Service” reminds us that we will likely see Trump-tariffed companies slap fresh tariffs on U.S. goods. This, along with the margin pressure and tepid new order growth identified in the March Flash PMI data, means we are still concerned about June-quarter guidance and watching out for negative March-quarter earnings pre-announcements. In other words, if the S&P 500 closes above the 200-day moving average near-term, it doesn’t necessarily guarantee a sustained move higher toward the 50 and 100-day moving averages.
And if the S&P does not close above the 200-day moving average Monday, the question we have to ask ourselves is whether there a catalyst in the next few days that could get it over that line. As of now, one doesn’t stand out, and if we get a wave of negative earnings pre-announcements, that splash of cold water could take some of the newfound enthusiasm out of the market.
To be clear, we are not aiming to be downers on Monday’s move higher, but we do have to game things out factoring in what lies ahead. As we do that, we will look to revisit panic points and a few select price targets as warranted, including the one for Palantir PLTR.
At the time of publication, TheStreet Pro Portfolio was long PLTR.
