Trading optimism and technical signal reinforce S&P 500's upside outlook

The S&P 500 Index started the week up 1.5%, reflecting positive investor sentiment amid signals of softening trade rhetoric between the US and China. Chinese Vice Premier He Lifeng called the talks held in Switzerland over the weekend an “important first step” toward overcoming the differences. According to US Treasury Secretary Scott Bessent, the details of the agreement and a joint statement will be released later.

Against this backdrop, the market expects a reduction in the tariff burden. However, Washington still insists on high duties — exceeding 20%. Any deviation from expectations could put pressure on prices. Currently, US tariffs on Chinese imports reach up to 145%, while Beijing’s retaliatory duties are as high as 125%.

China remains an important market for American businesses. Bloomberg Intelligence estimates that the average company in the S&P 500 Index derives about 6.1% of its revenue from sales in the PRC. For technology giants, the share is even higher: 17% of Apple's revenue and 22% of Tesla's revenue come from the Chinese market.

Although specific measures have not yet been announced, market signals are supportive of a short-term recovery. Nevertheless, the S&P 500 Index remains sensitive to any changes in trade negotiations.

From a technical point of view, the daily chart (D1) shows the S&P 500 Index has moved out of its descending corridor, which confirms a trend reversal.

Looking at the H6 time frame, the wave structure indicates the development of a third ascending wave, which intensified after the breakout above the peak of the first wave near 5490.00. The Bulls and Bears Power indicators are in the positive zone, confirming continued bullish momentum.

Signal:

The short-term outlook for the S&P500 suggests buying. 

The target is at the level of 6050.0.

Part of the profit should be taken near the level of 5860.0.

A stop-loss could be placed at the level of 5550.0.

The bullish scenario is short-term, so a trading volume should not exceed 2% of your balance.