Today, we will tell you about the stock market. The stock market won’t crack. Bulls say it’s time for a breakout to new highs. Let’s start:
However, ‘periods of high uncertainty aren’t a good fit to a long-term breakout The strategist warns
It’s the unbelievable, bendable, indestructible stock market. It seems so.
Stocks took everything that bears did to them over the last week, including new inflation figures, weakening expectations of a cut in interest rates, and new rounds of tariffs, and managed to post good gains throughout the week. This wasn’t enough for the market to start the S&P 500
SPX+0.24% Out of the sideways trading pattern that has dominated mainly throughout the year, but some believe it might be just a matter of the passage of time.
“Resiliency has been the theme not just this week, but the last few weeks, when you think about some of these headlines,” Adam Turnquist, chief technical strategist at LPL Financial, told MarketWatch on Friday.
In the last week, Turnquist said that if you had explained to him what would come in the coming weeks regarding tariffs, the popular consumer-price index for January, and other changes, he would have been looking for a 2 to 3 percent drop in the week.
In the meantime, stocks continue to trade in a range of. In reality, the S&P 500 has been just 5% below its record high in the last two months, according to Dean Christians, senior research analyst at SentimenTrader, in a note on Friday.Notee.
Furthermore, the S&P 500 achieved just one record in the time frame: on the 23rd of January, 2023. The index ended the day just 0.06 percentage points below that record, completing a trading pattern typically preceded by upside breakouts in the past, Christians wrote.
“The S&P 500 has demonstrated extraordinary resilience over the past few months, staying within a small range despite an avalanche of headlines that raise alarms. The volatility seen in the market amid uncertainty indicates that buyers are in control of the market, ensuring it remains steady,” Christians wrote.
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Sentiment Trader discovered that an upside breakout often follows consolidation. The index rose 77 percent of the time during the next two weeks using 22 signals dating back to 1928.
The index traded on Friday over its Jan. record closing of 6,118.23 before concluding on a slight loss. The S&P 500 posted a weekly gain of 1.5 percent, whereas it was the Dow Jones Industrial Average.
DJIA+0.02% The Nasdaq Composite gained 0.6 percent while the Nasdaq Composite
COMP+0.07% The market has risen by 2%.
A weekly closing above the current S&P 500 record could be the breakthrough investors have been waiting for. Extrapolating the recent trading range would give an upward technical potential of 6,350, according to LPL’s Turnquist.
The S&P 500 gapped lower on Jan. 27 as investors panicked over Chinese artificial-intelligence startup DeepSeek’s claims that it had trained an AI model much cheaper than rival U.S. large-language models, casting doubt on expectations for massive AI-related spending that has benefited key players such as chip maker Nvidia Corp.
NVDA+0.40% However, the market quickly recovered the losses and pushed back to the upper end of the range.
The following Monday, Feb. 3, the market plunged in the early hours, creating a gap in the daily chart, following President Donald Trump’s pledge of 25% tariffs on imports from Canada and Mexico and an additional 10 percent tariff on imports from China. Trump eventually backed down and announced later in the day that he was going to delay trade tariffs for Mexico as well as Canada for a month after the heads of both countries announced they would intensify the border police and clamp down on drug trafficking across borders. The stock market then recouped its losses.
Turnquist stated that the president’s at least temporary reversal of the tariffs seemed to reassure investors that a “Trump put” existed not too far from current market prices. This decision sparked fears among investors that Trump will take signals from the market by avoiding policies that could put enormous pressure on the market.
It also confirmed what appears to be a belief that retail traders are attempting to “buy the dip” on any downturn, Turnquist noted. That was reflected in the S&P 500’s ability to hold support at its 50-day moving average on Wednesday after the January consumer-price index was much hotter than expected, sending Treasury yields jumping and leading investors to curtail expectations for rate cuts in 2025 further.
Stocks soared on Thursday following the rising Jan producer-price index, which has eased concerns about inflation. It’s because some PPI readings pointed to the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures index, which would be a bit cooler than Wall Street had begun to worry about.
Additionally, on the same day, Trump ordered his administration to look into ways to apply reciprocal tariffs on various U.S. trading partners. Officials said the decision could be made from April 1. Investors reacted excitedly because they worried that the tariffs would go into effect immediately.
It’s unclear what the impact of the tariffs will be. However, economists have warned that the proposed measures could be a significant blow that could raise inflation over the next few years and undermine the expectations of further Fed rate reductions.
Turnquist said that the uncertainty surrounding tariffs and other possible policy announcements raise doubts about the chances of a breakaway.
“Typically, you don’t get a sustained breakout in periods of high uncertainty,” Turnquist stated. However, Turnquist hesitates to “fight the tape and trends” if the S&P 500 is a breakout on the upside. He also said that the market leadership is “pretty risk-on,” with traditional defensive sectors like utilities, healthcare, and consumer staples left behind.
When the S&P 500 manages a breakout “with that kind of leadership, that’s a good sign,” said the analyst.
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