Fed Rate Cut Fuels Bullish Momentum: S&P 500 Hits All-Time High

This week, markets are navigating several economic events, while technical analysis of the S&P 500 highlights a sustained uptrend since early August. The “Golden Cross” formation between the 20 and 50-period EMAs, coupled with the Federal Reserve’s 50-basis-point rate cut, has further reinforced bullish momentum. Traders are now focused on key resistance and support levels, which offer strategic price targets as the market continues to exhibit strong directional movement.

Thursday 01:45 am (GMT+3) – New Zealand: GDP q/q (NZD)
Thursday 04:30 am (GMT+3) – Australia: Employment Change (AUD)
Thursday 14:00 (GMT+3) – UK: Official Bank Rate (GBP)
Thursday 15:30 (GMT+3) – USA: Unemployment Claims (USD)
Friday 02:30 am (GMT+3) – Japan: BOJ Policy Rate (JPY)
Friday 15:30 (GMT+3) – Canada: Retail Sales m/m (CAD)

Since August 5, the S&P 500 has been in a persistent uptrend, characterized by a series of higher highs and higher lows, further supported by a “Golden Cross” double crossover between the 20 and 50-period Exponential Moving Averages (EMAs). The double crossover has further strengthened and accelerated the bullish momentum, reinforcing the upward trajectory of the Index. Despite a brief pullback, the Index reached a new all-time high of 5694.78, surpassing its previous July record, with the upward movement largely driven by the Federal Reserve’s 50-basis-point rate cut, which added further momentum to the market.
Technical indicators, including the 20 and 50-period EMAs, the Momentum oscillator, and the Relative Strength Index (RSI), all suggest a continuation of the bullish trend. The short-term EMA is trading above the longer-term EMA, and price action remains above both, signaling strength in the market. Additionally, the Momentum oscillator is positioned above the 100 baseline, and the RSI is holding above the 50 level, further confirming the upward bias. Upon closer examination, the presence of a negative divergence between the price and the Momentum oscillator signals a potential downside correction.
Using the Fibonacci Retracement tool, based on the recent swing high of 5657.68 and swing low of 5385.01, three potential price targets have been identified: 5826.19, 6098.86, and 6540.04. These levels provide potential upside objectives if the current trend persists.

Should the bulls maintain market control, traders may direct their attention toward the four potential resistance levels below:

5694.78: The initial resistance is 5694.78, which aligns with the all-time high that was reached on September 18.
5826.19: The second price target is identified at 5826.19, corresponding to the 161.8% Fibonacci Extension between the swing high of 5657.68 and the swing low of 5385.01.
5951.81: The third target is established at 5951.81, aligning with the weekly resistance (R3) estimated using the standard method.
6098.86: An additional price target is estimated at 6098.86, corresponding to the 261.8% Fibonacci Extension drawn from the swing high of 5657.68 down to the swing low of 5385.01.

Should the sellers take market control, traders may consider the four potential support levels listed below:

5566.90: The first support level is identified at 5566.90, representing a confluence of technical indicators: the peak formed on August 1, the 20-period Exponential Moving Average (EMA), and the 23.6% Fibonacci Retracement between the swing low of 5091.15 and the swing high of 5694.78.
5478.96: The second support level is positioned at 5478.96, marking the 38.2% Fibonacci Retracement between the swing low of 5091.15 and the swing high of 5694.78. It also aligns with the weekly support (S1) calculated using the standard pivot point method, reinforcing its significance as a key technical support level.
5385.01 The third line of support is established at 5385.01, representing a daily low marked on September 6 and coinciding with the 50% retracement between the low point of 5091.15 and the high point of 5674.06.
5313.56: An additional downward target is observed at 5313.56, reflecting the 61.8% Fibonacci Retracement between the low point of 5091.15 and the high point of 5674.06.

After a brief rally following the Federal Reserve’s decision to cut interest rates by 50 basis points, markets pulled back as Chair Jerome Powell signaled no urgency for further large rate cuts. Despite initially pushing stocks to all-time highs, traders sold off on the news, causing the S&P 500 to end the daily session down 0.15%.
However, as of the time of writing, the S&P 500 has posted gains exceeding 0.98% during today’s session, reflecting positive momentum in the market.

In conclusion, the S&P 500 continues its upward direction, driven by the Federal Reserve’s recent 50-basis-point rate cut and supported by the “Golden Cross” between the 20 and 50-period EMAs. Key resistance and support levels have been identified, with traders closely monitoring these targets as the market maintains its bullish momentum. Economic events, including rate decisions and employment data, add further complexity to the market outlook.