S&P 500 Momentum Report

S&P 500 looks set to round up November with its best monthly performance for the year

The S&P 500 has added to its winning streak last week, gaining for the fourth straight week and looking on track to deliver its best monthly performance for the year. Thus far, there has not been much in the way to challenge broad market expectations for an end to the Federal Reserve (Fed)’s hiking cycle, while market participants continue to bask in the hopes of a ‘soft landing’ scenario. Attention will be on the upcoming US personal consumption expenditures (PCE) price data this week, with expectations for core inflation to soften further to a new two-year low, which may validate views for further rate hold in December.

With the US dollar central to the risk environment, breaking below its 200-day moving average (MA) this week seems to mark an extension of its near-term downward trend. That said, the S&P 500 has been more muted lately, with a flat-lined relative strength index (RSI) and moderating moving average convergence/divergence (MACD) on the daily chart pointing to some near-term stalling in upward momentum. Some wait-and-see are broadly in place for now, while there are not much indications of a trend reversal just yet. As we head into December, seasonality continues to be supportive of market sentiments, with a relatively high positive rate and a stronger performance at the beginning and month-end.

Technical analysis: S&P 500 continues to set its sight for a retest of its year-to-date high

With the Nasdaq touching a new year-to-date high last week, eyes are now on whether the S&P 500 can follow suit, with the index standing just less than 1.5% away from its July 2023 top. Near-term overbought technical conditions may raise the odds for some cooling in the rally, but the broader upward trend remains intact, with the index trading above its various MAs and its Ichimoku cloud zone on the daily chart. Ahead, the 4,600 level will present the next level of resistance to overcome, with any successful break potentially leaving its January 2022 all-time high at the 4,800 level on watch next. On the downside, the 4,400 level may be support to hold, where its 100-day MA stands.

Source: IG charts

Sector performance

The holiday-shortened week in the US has brought a more subdued performance for the S&P 500 last week, with investors’ shifting their preferences towards defensive sectors (consumer staples, healthcare, utilities) while awaiting further market direction. The technology sector was the underperformer with a 0.8% loss for the week, as a 2.4% gain in Microsoft failed to offset the broad losses in the semiconductor space. Nvidia was down 2.1%, with its recent 3Q results triggering some profit-taking following a 24% rally over the past month. Other big tech stocks were mostly flat, with more notable gains in Microsoft (+2.4%) and Amazon (+1.8%).

Source: Refinitiv

Source: Refinitiv

Source: Refinitiv
*Note: The data is from 21st – 27th November 2023.

Source: Refinitiv
*Note: The data is from 21st – 27th November 2023.

Source: Refinitiv
*Note: The data is from 21st – 27th November 2023.