As I forecasted in my previous SP500 analysis, futures gave a pullback to 3650 and rallied back. Stock indexes closed week at new all-time record highs. Bulls are holding fast to their rosy outlook for more vaccines, low-interest rates, more stimulus, and a jump-started U.S. economy, which has been reinforced with better-than-expected results from both economic data and earnings last week.

Sp500 Fundamental analysis

Data last week showed the services side of the economy gained some steam in January, with the ISM Services Index rising to a two-year high. That’s good news for some of the hardest-hit sectors.

The bulls’ view is that the economy is already on the mend and will likely get a further boost from another injection of stimulus from the government that could begin rolling out in a few weeks.

Lawmakers are expected to reveal a full proposal next week. At the same time, the U.S. vaccination campaign appears to be accelerating as new coronavirus cases continue to decline. Moreover, bulls believe these catalysts will all come together to set the economy up for a booming second half that will result in massive growth in earnings that continues through 2021 and possibly into 2022. 

Earnings

Fourth-quarter earnings for S&P 500 companies are on track to return to positive territory and analysts have already been raising estimates for Q1 2021. The pace slows down a bit next week but there are plenty of big names coming up, including Simon Property on Monday; Cisco, Fidelity, Lyft, Mattel, Reynolds, and Twitter on Tuesday; Applied Materials, Cerner, CME Group, CocaCola, General Motors, Lumen Technologies, MGM Resorts, Uber, and Zillow on Wednesday; Airbus, AstraZeneca, Duke Energy, Hubspot, Kellogg, Kraft Heinz, Nestle, Nvidia, Pepsico, Tyson, and Verisign on Thursday; and Dominion Energy, Enbridge, and Moodys on Friday.

sp500 technical analysis

Stock market technical analysis 

There is still no swing entry for SP500 traders. And, the setup is very mixed. Cycles point we will get swing entry between somewhere March and April. However, the price action and Advance Decline Line is very strong. It makes me believe the bottom is already set. Also, we have a clear channel up on the daily chart. And, the price approaches its upper range. With that in mind, we can expect to see a pullback this week. However, if the price breaks out to the upside and sustains there, we will see a 5 – 7% rise. At the same time, such sectors as banking and energy can rally 15 – 20%. So, it makes more sense to look for swing entries in certain sectors rather than in SP500.

SP500 analysis and forecast – is bottom in? by Inna Rosputnia

Wishing you a great week!

Want To Make Your Trading More Profitable?

Subscribe to get free research, trading lessons, and more insights.

    (We do not share your data with anybody, and only use it for its intended purpose)