After plummeting to the level of 4,800.8 in early April, the S&P 500 index rose by 24.98% to 5,995.4 by May 29. The index not only recovered its losses but also reached March highs. By June 2, the S&P 500 has corrected by 1.94% and is at 5,880 at the time of writing.
The Moving Average Convergence Divergence Indicator (MACD) is far in the positive zone on the daily timeframe. Since early May, it has been showing strong upward buying momentum, which is slightly weakening today. The MACD on the four-hour timeframe has been losing buying momentum since May 29, and today it has crossed the zero line for the second time since May 22, moving into the negative zone and indicating emerging selling momentum in the short term.
Last week, Nvidia Corp. reported its earnings, which exceeded the expectations, and provided a strong revenue forecast despite US restrictions on selling the company’s chips in China. As Nvidia and Microsoft Corp. shares are climbing back to their record highs, traders are betting that the S&P 500’s leaders are poised to improve the entire index’s performance.
The S&P 500 is within 4% of its record high in February, with recovery being mostly driven by weaker tensions between the US and its trading partners. The index is also rising as the financial results of major tech companies show steady demand for cloud computing, software, electronic devices, and digital advertising.
Tesla Inc. shares have gained 56% since hitting a low on April 8. At the same time, Nvidia and Microsoft shares have grown 40% and 30%, respectively.
According to data collected by Bloomberg, the index’s strongest performers account for nearly half of the S&P 500's 19% rise from its April low.
Trading strategy option: buy at the current price with a Take Profit at 5,988 and a Stop Loss at 5,750.
This content is for informational purposes only and is not intended to be investing advice.
