Based on the laws of physics, an object in motion stays in motion. That certainly rings true for the S&P 500. Bullish traders hope it results in a continued upward motion, especially with momentum behind the index.
Of course, when it comes to bullish trends for the S&P 500, it means that big tech needs to prosper given the constituents that heavily comprise the index. With the focus on artificial intelligence (AI), this should provide big tech, or the “Magnificent Seven” specifically, with enough tailwinds to power through the rest of the year.
Part of the reason for the S&P 500’s current positive momentum is fourth-quarter earnings results. While specific results will vary, thus far they’ve been largely positive, giving the S&P 500 more reasons to continue reaching new highs.
“This bullish trend is partly attributed to a robust fourth-quarter earnings season, surpassing expectations and bolstering investor confidence,” FX Empire noted. “This performance suggests a robust economy capable of sustaining corporate profitability.”
S&P Sprinting Toward the Upside
While the index started out of the gate slowly in January, it regained its footing and is sprinting toward the upside again. The S&P 500 is up just over 5% for the year, continuing its rally from the end of 2023. That, of course, is absent of the Federal Reserve actually cutting interest rates. The central bank has been keen on keeping rates steady as it gets more confirmation from economic data before instituting rate cuts.
Nonetheless, the index is continuing to push higher while the Fed mulls when to cut rates. The common notion is that cuts were already priced into last year’s rally, but continued upside could prove otherwise and more optimism of cuts could fuel 2024’s rally.
“The market is showing a bullish inclination, primarily driven by the strong performance of leading tech companies, an easing inflationary environment, and a dovish turn in monetary policy,” the FX Empire report added.
Ride the Momentum With 3x Leverage
When the S&P 500 rises, traders can play to the upside with the Direxion Daily S&P 500 Bull 3X Shares ETF (SPXL). The fund offers thrice the leverage to the index, so only seasoned traders should use these products.
As mentioned, big tech will play a large role in more bullishness for the S&P 500. That said, traders may want to keep the Direxion Daily Technology Bull 3X ETF (TECL) in their toolbox, especially if they want to maximize their profit potential. The fund offers triple leverage, seeking daily investment results equal to 300% of the daily performance of the Technology Select Sector Index.
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