LIVE MARKETS-S&P 500: Breakout or fakeout?

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S&P 500: BREAKOUT OR FAKEOUT?

Since scoring its then-record closing high in late October of last year, the S&P 500 .SPX has been a bit of a choppy mess. Therefore, traders are noting key levels, watching closely for a breakout.

Indeed, since its 6,890.89 October 28 then-record closing high, the benchmark index sold off more than 5% into its November trough, before rallying to fresh record highs in late December and again in January. That said, on Tuesday, the SPX ended at 6,917.81, putting it up just 0.39% over the past 66 trading days since its October 28 close.

With this, the daily Bollinger Bandwidth, a historical volatility measure, has contracted to its lowest level since September 9. Compressed Bandwidth is directionally agnostic, but from the September 9 close, the SPX jumped as much as 3% over the next 10 trading days.

In any event, the S&P 500 ended Tuesday down 0.87% from its 6,978.60 January 27 record closing high and down 1.21% from its 7,002.28 January 28 record intraday high.

Now, on Wednesday, in the wake of a below-expectations ADP national employment number, e-mini S&P 500 futures EScv1 are suggesting a slight upward push for the S&P 500 index at the open.

If the SPX can ultimately break out to new highs, the next resistance will be a weekly Gann Line, which now resides around 7,090. This Gann Line has essentially capped strength since late 2024.

On the downside, the SPX's 50-day moving average (DMA), which contained Tuesday's weakness, is now just over 6,870. The 100-DMA ended Tuesday just over 6,790 and the January 20 intraday low was at 6,789.05.

Of note, since May 12 of last year, the S&P 500 has seen just one minor closing violation of its 100-DMA, which was on November 20.

Meanwhile, on Tuesday, four of the SPX's 11 sectors scored record closes, including Energy .SPNY, Industrials .SPLRCI, Materials .SPLRCM, and Staples .SPLRCS.

This came as the S&P 500 Value Index .IVX also posted a record close.

However, the IVX may be ripe for a rest. Through the end of January, it's now risen nine straight months, which is its longest monthly winning streak ever using LSEG data back to 1995.

(Terence Gabriel)

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