The S&P 500’s incredible rally continues thanks to NVDA. Things to note | chart watcher

Well, Nvidia did it! NVDA’s stellar earnings report sparked optimism in the stock market. A stock price increase of about 15% (for NVDA, this would be about a $100 increase in the stock price) indicates that investors still have a lot of optimism. Stock futures rose ahead of the opening bell on Thursday. The S&P 500 ($PX) widened to a new all-time high. Looking at the daily chart of the S&P 500, the index has bounced past its 21-day exponential moving average (EMA) several times since beginning its steep rise in November 2023.

Chart 1. S&P 500 ($SPX) index daily chart. Since November 2023, the index has maintained support of its 21-day exponential moving average while continuously hitting new highs.Chart source: StockCharts.com. For educational purposes.

Consider the 21-day EMA as the first support level. If the EMA support holds, the market can be considered in a bull run. NVDA’s strong guidance for the next two years has allayed any investor concerns. Interest rate cuts no longer seem to be front and center on investors’ minds. Despite Thursday’s higher-than-expected unemployment claims, investor optimism was unwavering. Concerns are likely to surface if the S&P 500 falls below the 21-day EMA, at which point we should look for the next support level, which could be the 50-day simple moving average.

The CBOE Volatility Index ($VIX) rose slowly on Thursday before falling later. VIX has shown some interesting behavior over the past few months, with a wide range of days and many upward and downward movements.

Chart 2. Daily chart of the CBOE Volatility Index ($VIX). VIX has had a broad day with many upward and downward movements that appear to be moving within a rising channel.Chart source: StockCharts.com. For educational purposes.

The slight upward trend in VIX is not evident when looking at the long-term chart of VIX. If you look at the monthly charts from 2000, before the most recent surge (the Great Recession of 2008 and the coronavirus crisis of 2020), the VIX was much more volatile than it is now. Note that it rose before exceeding 80. There are no similar signs at the moment, but it is always a good idea to monitor VIX regularly. That’s because VIX can tell us a lot about investor sentiment and send warning signals before a collapse.

Chart 3. Monthly chart of VIX since 2000. Pay attention to the erratic movements of VIX before the surge. It also starts to rise before the spike occurs. There are two main reasons to pay attention to VIX.Chart source: StockCharts.com. For educational purposes.

In other news, existing home sales increased in January, another sign that the economy remains healthy. One month’s data does not show a trend and February’s numbers may be lower given that mortgage rates have risen. Or maybe not. The US 30-year fixed rate mortgage chart below shows a slight increase in mortgage rates in February.

Chart 4. Average 30-year fixed RTE mortgage in the United States. After a sharp decline, mortgage rates rose in February. Will this rise affect home sales?Chart source: StockCharts.com. For educational purposes.

conclusion

Stocks are the most popular stocks among investors, and they will likely remain this way as long as AI continues to excite investors. And if NVDA continues to rise as it has this year, the S&P 500 will follow suit.

disclaimer: This blog is for educational purposes only and should not be construed as financial advice. You should not use any of our ideas and strategies without first evaluating your personal and financial situation or consulting a financial professional.