The US stock market bull market returns! With trade tariffs tensions easing, traders expect the S&P 500 to reach new highs again

According to Zhitong Finance APP, the easing of tensions in China-U.S. trade has driven a significant rise in U.S. stocks on Monday, and amidst this optimistic atmosphere, technical analysts are predicting that the S&P 500 index will reach new highs.

The closing price of the S&P 500 index has broken above the key 200-day moving average (5750 points) for the first time since late March; the Nasdaq is up 22% from its lowest closing price during the sell-off in April, entering a technical bull market.

John Kolovos, Chief Technical Strategist at Macro Risk Advisors, stated that there are no significant resistance levels before the S&P 500 index reaches the historical high of 6144 points set on February 19.

The so-called resistance level refers to a price point where selling is expected to exceed buying, causing an upward trend to pause. Breaking through these resistance levels indicates a shift in market sentiment.

Kolovos pointed out, "The S&P 500 index breaking above the 200-day moving average further confirms that the market trend is turning bullish. This means that during pullbacks, there is a higher likelihood of increased demand or buying interest, changing investment strategies and signaling that the bear market has ended."

Major U.S. stock indices have recovered losses since April 2, when President Donald Trump announced large-scale tariffs on imported goods. Currently, these indices are less than 1% away from recovering all losses for the year. Investors believe that the easing of China-U.S. trade tensions indicates that the Trump administration is softening its aggressive tariff policies.

The substantial progress made in the Geneva talks between China and the U.S. has boosted market confidence.

The current trend of the S&P 500 index has changed investors' strategies during market pullbacks—because they expect the stock market to rise further, their willingness to buy on dips has become stronger.

Outlook Prediction

Technical analysts are already predicting where the next bull market point will be if the S&P 500 index breaks its historical high.

In Kolovos's view, this will pave the way for the index to reach 6600 points. JC O’Hara, Chief Technical Strategist at Roth Capital Partners, believes the next target point is 6450 points, followed by 6645 points, which means an increase of over 10% compared to Monday's closing price.

Even so, historical experience shows that breaking above the 200-day moving average does not guarantee that the stock market will continue to rise.

Sam Stovall, Chief Investment Strategist at CFRA, pointed out that since World War II, of the 14 bear markets experienced by the S&P 500 index, nearly two-thirds began to rebound after a double-digit decline, rising to a level 2% or higher from the 200-day moving average, but then fell again to lower levels This has also led technical analysts to pay more attention to support levels. At support levels, stock indices typically rebound due to potential buying interest. Kolovos stated that last week's high of 5720 points has become an important support level, and if the index falls below 5580 points, it will force the index to retest the support strength at 5425 points.

Positioning

Deutsche Bank Securities strategist Parag Thatte stated that the total stock holdings are currently just slightly above the bottom of the long-term range since 2010. This means that investors who have reduced their stock holdings due to uncertainties caused by tariff policies will need to increase their stock positions if they want to participate in the market rebound.

As market trends and technical indicators change, the bullish trend of systematic funds has begun to emerge.

Bram Kaplan of JP Morgan wrote in a report released on Monday that after the market broke through key momentum levels on Monday, Commodity Trading Advisors (CTAs) are likely to start going long on U.S. stocks.

Craig Johnson, chief market technician at Piper Sandler, stated that any short-term pullback in the future may trigger buying rather than selling.

He said, "As market sentiment shifts, 'pain trades' (referring to market movements in the opposite direction of most investors' expectations) are now trending upward, and the worst-case scenario of deteriorating corporate earnings is likely not to occur."