SP500: The Nvidization of the US indices.

5月22日

It is clear that the US indices are inflated based on the boost from the Federal Reserve news. Yesterday three of the US indices closed higher, except for the Russell which closed slightly negative. This comes to reflect that the AI sector seems to be dragging with the magnificent 7 again in this directionality regardless of sectoral scope to all, due to its excess weight relative to the rest of the companies. The fed according to the Bank of America Global Fund manager survey seems to be the only one making the markets hold at highs. This main driver is followed by corporate returns as a key position. The SP500 has returned 5.41% with the average return for the month of May being 2.15%. That Sell in May and Go away feeling seems to be extending at least into June. An annual return of 11.11%, being 24.23% last year and -19.44% the year of the beginning of the Ukrainian war, being positive the two years before this one as well. What a great five years the market has been going with Jerome Powell pulling like the 90’s cycler Indurain on the uphills.

The fact that Nvidia is releasing today will also lead the way for that pocket with the Big 3 and the European indices following close behind. Look not so much at the detail but at the AI picture with Microsoft presenting improvements around its AI search engine, and Amazon with its buy orders to Nvidia and its superchips, etc. On the other hand there are Tesla's poor results and the herze company's problem of reselling its vehicles on the used market. Morgan Stanley is also bullish as the leading investment bank is indicating a 20% gain, and only one of its analysts was indicating corrections.

It would be necessary to take into account with the future currency of the BRICS+ in relation to the buying/selling towards gold/oil, an environment where money can be defended and the relation of the outflow of dollars from African and Chinese countries against that safe haven element. In other words, a monetary refuge that is sought outside the dollar environment and can trigger the price of gold in the long term as a fundamental element to defend reserves. In the future, we will have to pay attention to these movements on the part of the Brics group and its associates.

If we look at the chart, the index is currently in the highs zone again, surpassing yesterday the highs of April 1st. If we look at the RSI, it is currently overbought at 68.34% which could extend a little more forcing the highs zone. Although it is true that the price bell is weighted very strongly at 5,083 points, so it would not be strange to see an initial correction in the direction of the previous price of previous highs.

Ion Jauregui - AT Analyst




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