Is the S&P 500 Nearing a Top for Now?
The S&P 500 has enjoyed a strong run with new 52-week highs for six straight sessions. But some traders may consider waiting for a pullback -- especially with the Federal Reserve meeting next week.
The first pattern on today’s chart is Wilder’s Relative Strength Index (RSI). It moved back above the overbought threshold of 70 this week. While frequent overbought readings can reflect a bullish market, they can also represent moments of overextension, like mid-June, early February and last August.
Second, prices have pushed above the top of the Keltner Channel. Some investors may prefer buying inside these bands.
Next, the bottom study includes our Distance from MA script. It shows SPX is almost 6 percent above its 50-day simple moving average (SMA). While not a record, this is also near the top of its long-term range.
Finally, Cboe’s volatility index (VIX) has held the February 2020 low of 13.38 all month. This may create the potential for a modest increase in fear and selling pressure in SPX. (See below.)
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Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
The first pattern on today’s chart is Wilder’s Relative Strength Index (RSI). It moved back above the overbought threshold of 70 this week. While frequent overbought readings can reflect a bullish market, they can also represent moments of overextension, like mid-June, early February and last August.
Second, prices have pushed above the top of the Keltner Channel. Some investors may prefer buying inside these bands.
Next, the bottom study includes our Distance from MA script. It shows SPX is almost 6 percent above its 50-day simple moving average (SMA). While not a record, this is also near the top of its long-term range.
Finally, Cboe’s volatility index (VIX) has held the February 2020 low of 13.38 all month. This may create the potential for a modest increase in fear and selling pressure in SPX. (See below.)
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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