S&P 500 breaks through 6,300 and targets 6,550

Last week, the S&P 500 index continued to move in an uptrend, finally breaking through the strong resistance level of 6,300. This mark had capped the US stock market's growth since early July, though prices never entered a full correction. They just consolidated below 6,300. Breaking through this resistance opens new opportunities for short-term buying. Despite technical overheating, the S&P 500 has a good chance of rising to 6,550.

The persistent upward movement confirms that prices are trading above all key moving averages—from the 5-day to the 200-day. However, the RSI indicator approaching the 80 mark raises some concerns. That said, over the past three months, such a signal has only triggered short-term corrections lasting a few days. The main trend remains bullish, supported by the latest news.

Financial market sentiment improved following yesterday’s trade agreement between the US and the EU. Import duties on European goods are now set at 15%. This is higher than 10% predicted by the most optimistic forecasts, but significantly lower than Trump's initial proposals of 30%. The US-EU deal diminishes the uncertainty that had been weighing on investor activity.

Markets are now focused on two major events, namely the Fed meeting and US corporate earnings reports. The American central bank is set to announce its decision on Wednesday, though there is little doubt that interest rates will remain unchanged. Thus, S&P 500 dynamics will be mostly influenced by quarterly results from Microsoft (released Wednesday), Amazon, and Apple (Thursday). Strong earnings from these market leaders could provide an upward momentum for US stocks.

The following trading strategy may be suggested:

Buy S&P 500 at the current price. Take profit: 6,550. Stop loss: 6,300.