To The Moon

Let's take a look at the S&P 500 charts, and the recent trend seems to suggest we are close to the beginning of the new bull market for the S&P 500. As most would have known by now, the Nasdaq composite has entered a bull market on March 29, 2023, rising 20% from its December 28, 2022 closing low. 

Nasdaq composite confirmed bull market on March 29, 2023

The Nasdaq composite made a high on November 22, 2021, and has been in free fall since then. Whereas, the S&P 500 made its high on January 4, 2022. Hence there is a high chance that the Nasdaq is leading the S&P 500 this time around too.

Moving averages have sloped up

S&P 500 as on Apr 25, 2023 close

Looking at the daily chart of the S&P 500, the price action is above the moving averages, while the 50 MA is above 100 MA, which is above the 200 MA. As of right now, the 200 MA is still above 150 MA, ideally it would be 150 MA above 200 MA in a long term uptrend. Also all moving averages are sloping upwards, especially for the 150 MA & 200 MA, which has been on an upslope since the end of March.

MAs upslope typically indicate the birth of a new bull market

Let's take a look at the last few bear markets, and take a look when that happened.

2000 - 2002 Dot Com Bear Market

During the 2000-2002 Dot Com bear market, around the middle of 2003, when the 50 MA crossed above 150 MA and MAs started to slope upwards, the S&P 500 started to make higher highs and higher lows, moving in a wave pattern as the market started its new bull market that lasted until 2008. 

2008 GFC Bear Market

Next, during the 2008 Gobal Financial Crisis bear market, towards the third quarter of 2009 when the 50 MA was above 150 MA and the MAs started to slope upwards, the market continued to make higher highs and higher lows, and had one of the best runs until March 2020, gaining almost 5X of the lows at the beginning of 2009.

2020 Covid Crash

Lastly, during the 2020 covid crash, the MAs started to slope up in the second half of 2020, and the market took off, making higher highs and higher lows.

With that in mind, when the moving averages start to slope upwards, it is quite likely that the beginning of this new bull market is near, as the bull market is often born out of pessimism. Currently there is a lot of uncertainty as to whether the Fed will hike too much, or what if inflation continues to be sticky, especially with the labour market being so strong and unemployment is at a record low. 

Again as an investor, one must not discount all possibilities, as anything is possible in the markets, and not to go all in betting that the uptrend is here, but to have enough dry powder in your war chest to react to any opportunities in the market. Until proven otherwise, this could still be a bear market rally that started since October 2022, but that would be the longest bear market rally on record that lasted seven months!  

Key events ahead that will likely move the market

Big tech earnings this week, with Microsoft and Alphabet reporting on April 25, Meta reporting on April 26 close, Amazon reports on April 27 close.

This week will also see Initial Jobless Claims and Pending home sales on April 27, while on Friday April 28, PCE and Core PCE Index will be released at 8:30am ET. This is one of the key measures for the Fed, as they head into the FOMC meeting next Tuesday & Wednesday. The rate announcement will be made on Wednesday May 3, 2023 at 2pm ET.

Apple will report their earnings next week on May 4, after the close. This will be a highly watched one as Apple has a weightage of around 7.19% on the S&P 500 and is likely to move the market either way. 

$S&P 500(.SPX)$ 

$NASDAQ(.IXIC)$ 

$Apple(AAPL)$ 

@TigerStars