Focus on the 100-Day SMA Support Strength

Summary:

Societe Generale (SocGen) suggests that the S&P 500 will maintain a "buy-the-dip" mode as the Fed approaches a rate cut, but investors are skeptical.

BUY US30

Close Time

CLOSED

39319.48

Entry Price

40200.00

38200.00

49367.44 -211.48 -0.43%

1189.4

Pips

Profit

38200.00

39438.42

Exit Price

39319.48

Entry Price

40200.00

Fundamentals

Societe Generale SA projected that investors are likely to continue investing in US stocks, capitalizing on any market dips in anticipation of the Fed's potential interest rate cuts expected to commence in early 2025. Manish Kabra, SocGen's head of US equity strategy, along with other strategists, expects that despite a 15% rise in the S&P 500 index year-to-date, the market will maintain a "buy-the-dip" behavior, with further growth anticipated as the next Fed rate-cutting cycle approaches.

However, investors are not convinced, noting that historically, significant corrections often occur in US stocks during Fed rate cut periods. Last week, investors were net sellers of US stocks for the first time in a month, with outflows mainly from hedge funds and institutional investors, while retail investors were buyers.

For the week ending June 21, Bank of America clients saw a total net outflow of $1.6 billion. Retail investors were the only net buyers, complemented by corporate buybacks for the fourth consecutive week of purchases. Sector-wise, technology and communication services led inflows for the third consecutive week, while financial stocks saw the largest outflows for the second consecutive week.

Market Outlook: US stock markets paused their upward movement yesterday. Investors seem to be in a wait-and-see mode after the rebound, and will assess whether it can continue into the second half of the year. Despite bearish sentiment following the Fed's delayed rate cut plans, the market appears to remain on a bullish track.

We expect some upward movement in the stock market in the second half of the year. However, investors should be cautious of a sudden bearish reversal and evaluate sentiment before adding more long positions.

Focus on the 100-Day SMA Support Strength_1

Technical Analysis

The Dow Jones Industrial Average Index (US30) remains under pressure intraday and may continue a bearish trend to test the 100-day SMA. Investors should monitor the index's reaction near the moving average. A strong bullish rebound from this level could signal a continuation of the uptrend. The next higher swing high or lower swing low will determine the medium to long-term direction of the index.

Trading Recommendations

Trading Direction: Long

Entry Price: 38871

Target Price: 40200

Stop Loss: 38200

Valid Until: 2024-07 - 12 23:55:00

Support: 39123, 39043, 38857

Resistance: 39309, 39641, 40079

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