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SP500 trades near all-time highs

Another day, another bullish session. US equities continue to rise and new record highs will likely be set soon.

The SP500 index traded half a percent higher ahead of the US session, climbing to the 4,800 USD level again and flirting with its all-time highs at 4,810 USD.

JP Morgan confirmed its overall bullish bias for SP 500 in its latest strategy report. The US bank used technical analysis and spotted some risk catalysts to suggest further advances of the key US equity index.

The SP 500 Index continues in a relatively low volatility bull market. They expect those conditions to dominate the first half of next year, albeit at a slightly lower rate of change. Additionally, they suggest using short- to medium-term risk-off periods to add to long exposure.

In our view, the 4430-4465 Sep-Oct pattern breakout and other nearby support levels mark a new floor, JP Morgan concluded.

Seasonal pattern in January

From other news, there is a saying in the markets: “As January goes, so goes the rest of the year.”, also known as the January Barometer. Since 1928, the SP500 has had 93 occasions to test the January Barometer, and in 64 of those years, the market did close the year in the direction that January set. By comparison, all other months, on average, were significantly less likely to be as well correlated as January.

Although this Barometer failed to work in 2021, it might work this year (statistically speaking). Therefore, if the market continues to rip higher this month, the whole year could be bullish.

Later today, the US Markit manufacturing PMI for December is due, along with construction spending data for November. Both numbers will unlikely move the markets.

Technically speaking, the light resistance is expected in the 4,800 – 4,810 USD area. Once broken, we might see another leg higher, targeting the psychological threshold of 5,000 USD.

The midterm support is slightly above 4,700, where previous highs are located. So as long as the index trades above that level, the medium-term outlook seems bullish.

The 200-day average currently stands at 4,400 USD, and it has not been tested since June 2020, sounding an alarm over the overextension of the market. But, till now, it has been ignored.

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