S&P 500 Hits New 5-Month High but Faces Major Technical Resistance
The S&P 500 (SPX) hit a new 5-month intraday high around 2821 on Wednesday before paring some of its gains and pulling back below key technical resistance around 2816. Driving the stock market higher on the S&P 500’s fourth consecutive up-day were tech stocks led by Nvidia (NVDA), which surged 3.75% on Wednesday.
Wednesday marked the fifth time that the S&P 500 has tested the major 2816 resistance area since mid-October. This year, the first two tests occurred in late February and early March. On both of those occasions, the S&P 500 promptly turned back to the downside at resistance. On Wednesday, the index was able to squeeze out a new intraday high, but was unable to sustain a confirmed breakout and close above that critical 2816 level.
From a technical analysis perspective, the more times a support or resistance level is tested and holds, the stronger that level becomes. The rest of this week will help decide whether this important technical level will be breached or respected. Any upside breakout will validate the market recovery from the late-December lows and increase the likelihood of a full recovery up to September’s 2940-area record high, and potentially above. Any failure to breakout, however, could send the S&P 500 back down towards its 200-day moving average once again.
IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Past performance is not indicative of future results. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Chief Market Strategist at The Technicals
With more than two decades of experience as an equity analyst for several major research firms, Don has covered individual stocks (both technically and fundamentally) across a wide variety of sectors and industries, including tech, financial, and retail. He has been quoted regularly in key financial media like Bloomberg and Reuters. Contact Don