S&P 500 breakout into bull market?

The S&P500 gained 2.47% this week at 4070.56, adding to the overall positive start to 2023. It has since gained in three out of the first four weeks of 2023.

S&P 500 breakout

It has finally broke out of the long term trend line in red that also coincided with the 200 MAand managed to stay above it this week. The 50 MA is above 150 MA, and the 50 MA is getting close to crossing over the 200 MA (but not yet).

Will Powell throw cold water at the market?

Ahead of the FOMC meeting and rate hike decision to come on Feb 1, the market expects 25 basis points hike to bring the Fed funds rateto 4.5% to 4.75%, current probabilities from the CME FedWatch tool show 99.2% of a 25 bp hike.

CME FedWatch tool for Feb 1st

Looking ahead at the March and May meetings, the market has 82% chance that the rates will be at 4.75%-5.0% in March and subsequently in May, there's 58.5% chance that the rates remain at 4.75%-5.0%, implying the Fed will stop raising rates and hold, but that is still below the median of 5.0% to 5.25% from the Fed's Dec 22 economic projections dot plot. 

FedWatch March 2023

FedWatch May 2023

Market breath indicates bullish sentiment is back

MMTH at 57%

The market breath momentum indicator (Lookup ticker symbol MMTH) which indicates percentage of stocks above 200 day moving average currently is sitting at around 57%. A reading above 50% usually points that 50% of the stocks are above their 200 moving average andusually signs that the stocks are starting to gobullish. Looking back at historical data, when the market breath touches 20%, aka 20% of stocks above their 200 day moving average, it usually conincide with the market bottom.

So the question on everyone's mind now is, will this rally be sustainable or do we end up lower again? I guess the levels we have to test are 4100, followed by 4200, 4300, and if these levels fail, look for support to form. 

AAPL earnings next week

Apple will report their earnings on February 2nd after the closing bell. Investors will want to see how Apple performed in the quarter that ended in December, which usually is their strongest quarter that coincides with the holiday season. How much of a dent in their earnings will be affected by production delays in the iPhone14 Pro models, and how Apple's outlook will be for the upcoming quarters are likely to affect performance of their stock and also general market performance. Apple is the heaviest weight in the S&P 500 at around 6% to 7%, so depending on how Apple swings, the broader market would also be heavily influenced.

$S&P 500(.SPX)$ 

$SPDR S&P 500 ETF Trust(SPY)$ 

$Apple(AAPL)$ 

@TigerStars