- Markets are breathing easier—but is this just a pause, or a pivot?
- With S&P 500 testing 5500 and Nasdaq eyeing 19400, bulls are back on the offensive.
- But earnings and geopolitics could still flip the script in a heartbeat.
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Stabilization—or at least a maintenance of the status quo—in the ongoing tariff war is fueling a rebound across European and U.S. equity indices. On the demand side, markets are also buoyed by a cooling of tensions between former President Trump and Fed Chair Powell. Trump has clarified that he does not intend to pursue Powell’s removal, which has helped ease investor concerns.
With this backdrop, sentiment in the days ahead will likely be shaped by quarterly earnings from major corporations. Yesterday, Alphabet (NASDAQ:GOOGL) and Intel (NASDAQ:INTC) reported after the close. Next (LON:NXT) week, attention will shift to results from Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), and others.
Geopolitical developments remain critical. Investors should continue monitoring the war in Ukraine. Despite Russia outlining increasingly specific conditions for a cease-fire, a final agreement still appears distant.
S&P 500 Tests the 5500 Level
The broad-based recovery in the S&P 500 is gaining momentum. Following the Christmas break, the index resumed its upward trend, mounting another test of the critical 5500-point threshold. In the short term, this move has delayed the risk of deeper declines.
Technically, the 5500 area is highly significant—breaking through it could pave the way toward the next resistance around 5800 points.
Figure 1: Technical Analysis of the S&P 500
To the downside, a key support remains the local uptrend line. A break below it could open the door to testing the demand zone near 5100 points.
Nasdaq Bulls Regain Ground
The Nasdaq is mirroring the S&P 500’s technical setup. The index is currently testing the 19400-point level, which could be breached as early as today’s session.
Figure 2: Technical Analysis of the NASDAQ
If bulls manage to push through, it could clear the path for continued upside, with the next resistance zone clustered near 20500 points. Conversely, a drop below the uptrend line would signal renewed weakness, potentially leading to a test of the 18000-point demand area.
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