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Following the recent weakness, we saw a good recovery yesterday in risk assets, leaving the major indices with bullish-looking price candles. After a weaker start yesterday, global indices all turned higher; Bitcoin climbed well north of the $100K level, while copper, antipodean dollars and yen crosses also got a piece of the action. But there hasn’t been much follow-through yet during the first half of Thursday’s session. Can that change as we head towards the US open?

Before discussing the macro factors in detail, let’s have a quick look at the technical picture of the S&P 500 first, which shows an overall bullish structure.
 

S&P 500 technical analysis and trade ideas
 

From a technical standpoint, the S&P 500 futures chart bounced right where it needed to yesterday. As you can see from the S&P 500 futures daily chart, the area between 6722 to 6765, marks the prior breakout region. In addition to that, the 210-day exponential average also comes into play here. So, the index needed to hold above here to maintain a bullish bias, and judging by yesterday’s bounce here it looks like the bulls have held their own. We they will now need to see is some upside follow-through. If the index can now clear 6850 resistance, then a revisit of the all-time high at 6,953 could be on the cards, possibly as soon as today. Above that? Well, there is the 161.8% Fibonacci extension level at 6991 – this is derived from the last significant downswing that took place between February-April. Slightly higher, you have the psychological-important 7,000 level next, which is where I expect the index to get to in the coming days. But in the event the selling resumes first, then that could open the way towards the next support at 6722 and then the trend line seen slightly lower at around 6665. But my base case scenario for today is that the market will want to push higher.
 

So, why have stocks remained largely support?

The lack of any major bearish catalysts plays a big part here. But there were several factors behind yesterday’s rebound in stock prices and the broader firm risk appetite that has persisted for weeks. For example, many markets recovered from key technical support levels as I have discussed above. But the ongoing pattern of dip-buying continues to dominate, with no significant bearish catalysts emerging to meaningfully dampen sentiment. A lot of the gains have largely been due to the A.I. linked shares and in particular Nvidia stock which sits just below the $200 mark with shares rising 1.5% in pre-market.

From a macro view point, investors are also anticipating further interest rate cuts from major central banks. While Powell’s comments at last week’s FOMC press conference prompted a modest hawkish repricing of US rates, the overall outlook for easier monetary policy is still driving equities higher. Additionally, the recent extension of the US-China trade truce has sustained demand for AI-related stocks, while earnings this season have been generally positive.
 

Dip-buying

Yesterday’s rebound followed an initial drop in US index futures and European markets, extending losses from earlier in the week when equities had paused after a strong rally in the absence of fresh catalysts. Traders searching for new justifications for the high valuations underpinning the market weren’t finding many compelling reasons to buy – but they weren’t eager to sell either, as the subsequent rebound suggests. With dip-buying remaining a defining feature of recent market behaviour, downside moves have been shallow, and this latest recovery appears to be another example of that trend. For the same reason, the intra-day dip we have seen in European markets and US index futures today could be bought once again – especially following the formation bullish signals across major indices yesterday.

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