S&P 500 Outlook: Warning Signal Raises Risk of Market Correction

SP 500 Price Analysis News

  • SP 500 May Top Out Soon
  • Most Stocks Trading Above 200DMA Since Feb 2018 Crash
  • SP 500 Eyes US-China Phase 1 Deal

Samp;P 500 Outlook: Warning Signal Raises Risk of Market Correction

Source: Refinitiv

SP 500 | Warning Signals Suggest Top Nearing

US equity markets have continued to go from strength to strength with a SP 500 attack a uninformed record high of 3295. Given a miss of dips for buyers to re-enters, investors have clearly jumped on a equity bandwagon (FOMO) and hence chasing a marketplace higher. However, with upside looking rather stretched, there are flourishing signs that a SP 500 and other equity markets alike, could be during risk of a important pullback.

Moving Averages: 50DMA (3163), 100DMA (3065), 200DMA (2987)

Over 80% of bonds within a SP 500 are now trade above a 200DMA, that is a tip suit given a Jan-Feb 2018 VIX blowout. That said, shortening equity bearing might be rather prudent, given that a index is clearly in need of a healthy correction.

SP 500 Stocks Above 200DMA

Samp;P 500 Outlook: Warning Signal Raises Risk of Market Correction

Phase 1 Trade Deal Expected to be Signed, However, this is Priced in

Investors continue to place their courtesy on a ongoing US-China trade brawl and with both parties approaching to pointer a Phase 1 trade understanding today. However, with this mostly labelled in, a impact on equity markets could be rather pale and so concentration will fast spin towards a subsequent Phase.

SP 500 Top Nears

Elsewhere, a determined upside opposite tellurian equities, Bank of America’s Bull and Bear indicator has strike a 21-month high, hence impending impassioned bullish sentiment. As such, they note that their indicator has supposing a initial sell vigilance given Jan 2018. Coincidently, this had preceded a pointy aroused sell-off seen in Feb 2018. That said, this raises questions as to either a SP 500 is impending a tip in a brief run.

SP 500 Price Chart: Daily Time Frame (Sep 2019 – Jan 2020)

Samp;P 500 Outlook: Warning Signal Raises Risk of Market Correction

Source: IG Charts

— Written by Justin McQueen, Market Analyst

To hit Justin, email him during Justin.mcqueen@ig.com

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