S&P 500 Breaks Above Key Technical Level: Why This Analyst Is Rooting For Strong Gains Ahead

S&P 500 Breaks Above Key Technical Level: Why This Analyst Is Rooting For Strong Gains Ahead

The S&P 500 Index rallied hard on Wednesday on the back of some weak data and Fed Chair Jerome Powell’s comments that were construed as hinting at a pivot.

What Happened: The S&P 500 Index rallied 3.09% before settling Wednesday’s session at $4,080.11 and the SPDR S&P 500 ETF Trust SPY, an exchange-traded fund that tracks the broader average, advanced 3.15% to $407.68, according to Benzinga Pro data.

The S&P 500 Index closed above the 200-moving average for the first time since late April and so did the SPY.

Chart Via Benzinga Pro

See also: $1,000 Invested In SPY Just Before Thanksgiving Will Fetch This Much By Year-End If Returns Match 10-Year Average

Why It’s Important: Looking at data dating back to 1950, the S&P 500 Index has remained below the 200-MA trendline for more than six months 13 times, Ryan Detrick, chief market strategist at Carson Group said. In those instances, only once did the index move back to new lows after breaking above the trendline. The average gain the index clocked in the following year after successfully challenging the 200-day MA has been 18.8%, he noted.

With the market entering a seasonally strong period, stocks could turn around provided the Fed does not spoil the part by holding on to its inflation focus.

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Posted In: Jerome PowellRyan DerickS&P 500 IndexAnalyst ColorNewsAnalyst RatingsTrading Ideas