S&P 500: Poised for Another Move Higher as Breakout Support Holds

Monday’s trading activity resembled a Triple Witching Friday more than what would be expected for the start of the week. Key news points, including speculation of a Federal Reserve rate cut and positive developments from Intel (NASDAQ: INTC), were mentioned, but what stood out was the elevated trading volume in both the S&P 500 and the Nasdaq.

Despite the relative quiet in the S&P 500 over the past few days, the most critical factor remains intact: the index has managed to hold its breakout support, a key technical level that signals the possibility of further gains. While the surge in volume did little to alter the broader outlook, the S&P 500 is showing signs of relative underperformance against the Nasdaq. However, technical indicators continue to lean bullish, suggesting the potential for upward momentum.

The Nasdaq, meanwhile, has maintained its breakout gap but remains below its July highs. Despite this, technicals for the Nasdaq are net positive, and the index continues to outperform both the S&P 500 and the Russell 2000 (IWM), underscoring its relative strength in the current market environment.

In contrast, the Russell 2000, which was discussed last week in terms of its symmetry, has shown a markedly different outcome. Despite losses over the past two days, the index has demonstrated resilience by holding former trend resistance as support. While the key $225 level continues to serve as resistance, the technical outlook for the Russell 2000 remains positive, with selling volume notably lower compared to periods of buying. This pattern suggests a favorable risk-reward scenario for traders looking to capitalize on potential upward movements.

For those focused on swing trading, yesterday’s close presented an appealing entry point, with the possibility of gains if the market follows through on its upward momentum. Although Monday’s trading session brought more of the same, the absence of any significant sell-off suggests that the market remains tilted toward further upside.

Looking ahead, the broader market sentiment indicates an expectation for continued gains. Both the S&P 500 and Nasdaq are holding critical support levels, and as long as these levels remain intact, the probability of a move higher remains strong. However, market participants will need to watch for follow-through in the coming days, as indices like the S&P 500 will require sustained buying interest to confirm their breakout.

In the longer term, much of the market’s future trajectory could be shaped by the Federal Reserve’s actions. Speculation around rate cuts has already contributed to market sentiment, but actual policy moves from the Fed will play a key role in determining whether the current bullish trend can extend further. For now, technical indicators across major indices remain favorable, and the market appears poised for another leg higher.