S&P 500 and Nasdaq 100 Extend Rally Despite Middle East Tensions

What to Know

• US stock indices remain bullish despite rising geopolitical tensions.
• Falling US interest rates continue to support risk appetite.
• S&P 500 is targeting the key 7,600 resistance level.
• Nasdaq 100 is approaching the major psychological 30,000 mark.
• Pullbacks continue to attract buyers across both indices.
• Markets are pricing in a potential 25 basis point Fed rate cut later this year.

Tuesday features a return from holiday for American traders as Memorial Day was on Monday and as so far it looks like they have a lot to think about. There are a lot of discussions about what’s going on in the Middle East as Israel has now pushed into Lebanon further, while the Americans attacked a port and the Iranians are demanding a release of 12 billion dollars of sanctioned cash to continue the negotiations. In other words, it looks like we continue to see more chaos.

With that being the case, it is difficult for markets to get extraordinarily bullish, but it is worth noting that they’ve been bullish for a while and one would have to assume that simple momentum probably helps. Interest rates dropping in America, ironically enough, have been part of this scenario as well, and that could also help.

S&P 500 

The S&P 500 pulling back just a touch in the early hours has brought in some buying right around the 7,520 level, and this is a market that looks like it is trying to get to the 7,600 level. Pullbacks at this point in time continue to offer buying opportunities and I do think that we have just broken out of another consolidation region, opening up the possibility of the next leg higher. That’s kind of interesting, but I think part of what people are looking at is that the Federal Reserve is expected to cut 25 basis points later this year.

NASDAQ 100

The Nasdaq 100 initially fell and then turned right back around to rally as soon as the Americans came on board. Because of this, it looks like we are going to try to face the 30,000 level and perhaps even break above there, but I don’t think that will be easy. I think that will be something that will take quite a bit of effort.

Short-term pullbacks are buying opportunities. I don’t have interest in shorting this market until we get well below the 28,500 level, something that I do not think happens anytime soon. It will be a noisy trip higher, but I do think 30,000 is all but assured to be targeted.

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