The S&P 500 futures have edged up 0.2%
this week to 6,010 points, marking a record high for the fourth consecutive
day. This continued "Trump rally" is now approaching the extreme
resistance zone at 6,100-6,200 points, leaving limited room for upside.
Historically, November and December have been among the most robust months for
the U.S. stock market, with average gains of 1.75%, while January historically
delivers the strongest monthly returns, averaging 4.25%. Should these patterns
hold, the S&P 500 could see further gains of up to 7.75%, potentially
reaching 6,500 by early 2025. However, a correction may be necessary to
solidify the rally’s foundation, as pushing higher without a breather could
create unstable conditions.
From a technical perspective, surpassing
resistance at 6,010-6,030 points would likely lead to the extreme target range
of 6,100-6,200. Holding above these levels could prompt the index to stretch
toward 6,500-6,600. However, these levels represent a significant overbought
zone and could trigger a substantial correction.
Large investors are showing continued support
for the rally. The SPDR S&P 500 ETF Trust (SPY) saw inflows of $3.4 billion
last week, recovering from outflows of $1.4 billion the previous week. On the
macroeconomic side, October’s inflation and retail sales data may briefly
temper the rally but are unlikely to disrupt it. Inflation is projected at 2.4%
YoY and 0.2% MoM, with producer prices expected to rise to 2.3% YoY, signaling
stable but moderate price growth.
In addition, Fed Chair Jerome Powell’s
upcoming address is anticipated to outline the Fed’s monetary stance under the
newly elected administration, potentially reinforcing the stock market's upward
momentum. Strong Q3 earnings results in the U.S. and Trump’s promises of corporate
tax cuts provide further corporate incentives for the rally to persist.
From a technical
standpoint, the outlook for the S&P 500 index has been unchanged. The
benchmark has surpassed primary targets at 5700-5800 points and restarted the
rally toward the 6100-6200 extreme targets. The next resistance lies at
6010-6030 points with a perspective to continue up to 6100-6200 points.
In the commodities
market, Brent crude oil prices are hovering around $74.00 per barrel. With a favourable
upside period for oil prices all eyes now are on Donald Trump and his actions. The
clash between Iran and Israel is seems to less bothering traders now. The
nearest resistance is at $78.00-80.00, while the support is at $70.00-72.00 per
barrel.
Gold prices have
passed the resistance at $2,710-$2,730 per troy ounce and retreated by 3.1% to
$2,696. If they manage to rise above $2,710-2,730 per ounce once again the
rally towards $2,870-2,890, with potential highs of $3,200-$3,300 per ounce may
resume.
In the currency
market, the Dollar rose by 1.0% last week, with the EURUSD closing down at
1.07180. The oversold pressure is mounting dramatically, while the Dollar
continues to strengthen. Possible upward correction may occur as markets weigh
Trump's potential inflation-boosting policies.