The S&P 500 has recently seen a significant surge due to Nvidia’s better-than-expected earnings report, surprising the markets and pushing the index higher by 0.50% on Thursday.

With this positive earnings report, can S&P 500 continue higher after tapping the long talked about $6,000 price level?

Broader View Shows the S&P 500 In a Broadening Wedge

Despite the bullish year that 2024 has been for the S&P 500, the weekly chart shows a developing broadening wedge starting from April.

This highlights a possibility that S&P 500 could be temporarily topped out. If this is the case, then a retracement to the Weekly EMA 20 or EMA 50 is possible.

Lending more credibility to the broadening wedge idea, the Weekly Stochastic RSI is also signalling a bearish divergence – which is a sign of weakening bullish momentum.

Does the S&P 500 have technical reasons to drop lower?

Going down to the daily timeframe, we can see a significant Bearish Fibonacci Retracement come into play. The 61.8% Fibonacci retracement is placed at $5,951.6, and is a major resistance level.

If the daily price is unable to close above this Golden Fibonacci retracement level, or closes above it then immediately loses it – it could spell some temporary downside for the index.

However, this is by no means calling for a major top on the S&P 500, as the index has several key support levels to break before traders begin to consider a prolonged downtrend:

• Weekly EMA 20 around $5,683.20
• Weekly EMA 50 around $5,348.40
• Lower Broadening Wedge Trendline around $5,350

If the daily price closes above $5,953.70 and holds above, then further continuation is likely – and the price could retest the upper trendline of the wedge at approximately $6,100 to $6,200.

Why the Nvidia Earnings Report isn’t As Bullish As You Think

Despite showing remarkable growth and EPS overshooting predictions by 8.66%, the Nvidia Earnings are not as bullish as you think. The last four earnings reports illustrate a clear slowdown in Nvidia’s growth, suggesting the company may be reaching a bottleneck in their growth.

This may incentivise investors to place their funds elsewhere, leading to a price decline on NVDA, which subsequently puts pressure on the S&P 500.

We did an analysis on Nvidia Stock yesterday, which lays out possible scenarios for NVDA in the coming days.

Closing Thoughts

• Nvidia’s earning reports may serve more as a cautionary sign, rather than a bullish one.
• S&P 500 is currently facing resistance at the 61.8% Fibonacci Retracement ($5,953.70).
• If the index closes above the level, a test of the upper trendline in the Broadening Wedge is possible ($6,100 – $6,200).
• If the index closes below, a test of the weekly EMA 20 would be critical in gauging the bullish trend’s strength.

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