LIVE MARKETS S&P 500: Echoes from 1929 and 2000?

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  • U.S. equity index futures modestly higher
  • Euro STOXX 600 index up ~0.6%
  • Dollar ~flat; gold, crude rise; bitcoin down
  • U.S. 10-Year Treasury yield dips to ~1.46%

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S&P 500: ECHOES FROM 1929 AND 2000? (0900 EST/1400 GMT)

The S&P 500 (.SPX) is on track to rise nearly 28% in 2021. With this, its rolling three-year gain now stands at 91%. That’s it’s best such rise since a 98% advance in 1999, which was, of course, just prior to the bursting of the tech-bubble in March 2000.

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As 2021 draws to a close, the SPX is nearing a 92-year log-scale resistance line, which has the potential to be a formidable barrier given that it is based off of the index’s 1929 and 2000 peaks read more :

SPX12282021A

On a monthly, basis, this line is now around 5,150, or roughly 7% above current levels. Since it is ascending around 25 points per month, it will reside around 5,225 in March 2022, or roughly 9% above current levels. read more

Additionally, monthly momentum is lagging. Since peaking at an all-time high in January 2018, the RSI is failing to confirm the SPX’s fresh record highs:

SPX12282021B

In fact, the current 47-month divergence is just slightly longer than the 45-month period from what was then the all-time high monthly RSI reading in June 1996 to the S&P 500’s March 2000 top.

Thus, given the extent of the S&P 500’s three-year advance, the resistance line, and the momentum divergence, early 2022 may be shaping up to be a critical test for the benchmark index.

(Terence Gabriel)

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LIVE MARKETS EUROPE TO RETURN ON DECEMBER 29: read more

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Terence Gabriel is a Reuters market analyst. The views expressed are his own

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