The $S&P 500 Index(.SPX.US)$ rose 0.4% to 4,604.37, while the $Dow Jones Industrial Average(.DJI.US)$ gained 0.4% to 36,247.87. The $Nasdaq Composite Index(.IXIC.US)$ closed 0.5% higher at 14,403.97.
S&P 500 index broke through the previous high of 4607 points intraday, which was set on July 27.
In July, S&P 500 was deviating too far from the long-term moving average, a condition referred to as a high "dispersion rate." Once the dispersion rate is high, the index tends to correct. There are two ways to correct: a sideways movement until the annual moving average catches up or a decline to meet the annual moving average. The S&P 500 rapidly declined and reversed after hitting the annual moving average.
Now, with the S&P 500 reaching the 4607 high again, it is once again far from the annual moving average. Will the S&P 500 experience another decline back to the annual moving average this time?
I believe that the S&P 500 is likely to break through and continue to rise this time. The adjustment since the end of July has been sufficient. If a decline happens again, and a head-and-shoulders pattern reappears, the entire major trend will be seriously disrupted. The trend in the U.S. stock market has been consistently good, characterized by slow upward movement and rapid adjustments, allowing for significant gains.
The Nasdaq index did not reach a new high but is consolidating around the 14446 level. Based on the current short-term candlestick pattern, there is a possibility of a new high. If the Nasdaq achieves a new high, the next target will be challenging the 15000 level.
In terms of Macro:
1. Payroll employment increased by 199,000 in November, beating the 185,000 expected by economists in a Bloomberg survey. The unemployment rate edged down to 3.7 percent, the U.S. Bureau of Labor Statistics reported today.
2. Consumer sentiment rose to 69.4 in December, surpassing the 62.4 expected by economists polled by the Wall Street Journal. Year-ahead inflation expectations fell this month to plunged 3.1%, sitting just above the 2.3%-3.0% range seen in the two years before the pandemic, according to the University of Michigan survey.
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