Key Takeaways:
- AI hype has been a major bullish cue for the S&P 500.
- S&P 500 price has been on an uptrend in 2023.
NEW DELHI (CoinChapter.com) — The hype surrounding artificial intelligence platforms has acted as a bullish cue for crypto and traditional markets. The S&P 500 (CBOE: SPX), which has grown over 20% in 2023 to reach a 15-month high near $4,562 on July 19, largely has the AI hype to thank for its bull run.
The Standard and Poor’s 500 is a stock market index that tracks the stock performance of 506 of the largest listed companies on the US stock exchanges. The Kobeissi Letter, a global capital markets analysis platform, noted an interesting trend in SPX’s 2023 rally.
In a tweet, the Kobeissi Letter noted that the top 7 firms in the index (by weight), namely Apple, Microsoft, Amazon, Nvidia, Tesla Inc., Alphabet Inc, and Meta Platforms Inc., were responsible for SPX price’s recent rally.
The seven firms are up by “an incredible 58% this year,” the Letter noted. Meanwhile, the other firms in the index gained only 4% in the same timeframe. Overall, the SPX price rallied 20% from Jan 3’s low of $3,794.3
Artificial intelligence has attracted much attention in 2023, with even the crypto markets seeing AI-related tokens’ prices rallying.
Furthermore, the Kobeissi Letter highlighted that AI has likely become central to the tech firms’ action plans. For example, the Letter noted that Nvidia mentioned “AI” 83 times in its recent earnings call.
This earnings season should be extremely interesting, to say the least.
The Kobeissi Letter noted
SPX Price Continues Rally, But RSI Becomes Overbought
Meanwhile, the S&P 500 price continued rallying on July 19, rising over 1% to a daily high of $4,562 before bears pared some of the day’s gains. SPX price has been forming higher local highs since Oct 2022.
However, the rally has forced SPX’s relative strength index into the overbought region, clocking at 74.13 on the daily charts. Traders often consider the occurrence a sell signal since overbought RSI’s often precede a bearish trend reversal.
Hence, should the rally fail, SPX’s price might drop to the support level near $4,500. Moreover, failure of the immediate support level might result in the index dropping to the support at $4,403, near its 20-day EMA (red wave), before recovering.
Conversely, an uptrend would result in SPX’s price registering near $4,600. Breaking and consolidating above the immediate support might help S&P 500 index price target the resistance near $4,685 before correcting.
