S&P 500 Forecast: Is the SPY Index a Buy or Sell Now?

S&P 500
S&P 500

The S&P 500 index (SPY) jumped to an all-time high as the fear and greed index gauge pointed to improving sentiment. The SPY rose to a high of $4,435, bringing its total year-to-date gains to almost 20%. It has risen by more than 102% from its lowest level in 2020. Similarly, the Dow Jones and the Invesco QQQ stock price have jumped to their all-time highs.

SPY news

The S&P 500 index is one of the most-followed indices in the world. It tracks the 500 biggest publicly traded companies in the US. The biggest firms in the index include Amazon, Microsoft, and Apple. 

The index has been in a strong bullish momentum helped by the strong recovery of the American economy. Recent data showed that the economy expanded by 6.5% in the second quarter while the economy created more than 943k jobs in July while the unemployment rate declined to 5.3%.

Meanwhile, the SPY has been boosted by the stellar quarterly results. According to Factset, with 89% of all firms in the index publishing their quarterly results, 87% of them have beaten on both revenue and EPS. This makes it the best performance since the company started to crunch these numbers. 

As you recall, two weeks ago, results from the biggest five tech firms in the US showed that they made a net income of more than $70 billion in three months. 

The S&P 500 is also rising after the new $1 billion infrastructure fund. The fund allocates funds to several projects like roads, bridges, and electric vehicle charging ports. 

Meanwhile, sentiment among investors is improving. The fear and greed index has risen from last month’s low of about 17 to 36. While it is still in the fear zone, the index is moving in the right direction.

S&P 500 index analysis

The daily chart shows that the SPY index has been in a strong bullish trend recently. As a result, it has moved above the 25-day and 50-day moving averages. Still, a closer look shows that the index has formed a rising wedge pattern that is shown in black. 

The MACD also seems to be forming a bearish divergence pattern. Therefore, there is a possibility that the index will have a significant pullback in the next few months. If this happens, the next key level to watch will be $4,000. This view will be invalidated if the price moves above $4,600.

S&P 500