Over the past month, the S&P 500 and Nasdaq have posted solid gains, and global markets are mostly on track to end September in the green.
A long-term uptrend that has been building for about two years has recently gained momentum thanks to the Federal Reserve.
With a bold 50 basis point rate cut, the Fed began what many expected to be a continuation of the monetary easing cycle.
Markets are already anticipating further interest rate cuts at the next meeting.
Importantly, recent economic data shows no signs that a recession is imminent, suggesting that these rate cuts are not a bailout, but rather a calculated move to stimulate growth. That's true.
The People's Bank of China also contributed to the positive mood by lowering interest rates and freeing up more than $140 billion in lending capacity to meet this year's 5% growth target.
With the market expected to end the week on a high, let's take a look at how the technical picture is shaping up for the major indexes.
S&P 500: An offshore pullback?
The S&P 500 has been a beacon of strength, recently hitting new all-time highs.
This breakout indicates solid market demand, primarily driven by expectations of further rate cuts and favorable economic conditions.
From a technical perspective, this move firmly establishes the 5,720 point as an important support level.
If the current pullback widens, this zone could act as a first line of defense for the bulls and provide an opportunity for traders to re-enter the market.
Above 5,720 points, a deeper correction could target the 5,660 level where the uptrend line intersects.
The convergence of this support level suggests that the downside is likely to be limited and the broader uptrend remains intact.
On the upside, round number 5,900 points represents the next significant resistance level.
If the bullish momentum continues, the market could quickly move toward this psychological barrier and set the stage for further upside.
The bulls have a clear objective, with both technical indicators and sentiment supporting continued upside.
Nasdaq eyes New Peaks
The Nasdaq is slightly underperforming the S&P 500, but is showing signs of strength. The index recently broke through a key resistance level of around 18,000 points, indicating momentum is building.
This breakout above a key psychological level marks a pivotal moment for the index, as it paves the way for a retest of all-time highs around 18,600 points.
From a technology perspective, what's next for NASDAQ is clear. It is to attack the peak in front of this.
If a pullback occurs before the Nasdaq reaches 18,600, traders should focus on the support at the 18,000 level, which previously served as resistance.
This zone is currently serving as an important tipping point for both short-term traders and long-term investors.
If the index breaks above 18,600, the next logical target for the bulls would be 19,000 points.
A sustained rally towards 19,000 will further strengthen the uptrend as technical indicators such as RSI and moving averages indicate continued bullish momentum.
DAX surge with near vertical gain
Germany's DAX has led the pack this month with a return of 3.34%, reflecting a near-vertical rise after breaking through 19,000 points.
If a shallow correction occurs, we expect bullish momentum to be maintained and support near the previous highs of 18,900-19,000 points.
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