Fairlead Strategies says a bigger push higher in S&P 500 is likely coming

Investing.com -- The SPX and Russell 2000 Index surpassed their postelection highs on Wednesday, suggesting the potential for a further upward trend before any market pullback occurs, Fairlead Strategies analysts said in a note Tuesday.

"With this in mind, we would hold most long positions and temporarily pare back any existing hedges, including inverse ETFs and other negatively correlated positions," analysts said.

The yield on the 10-year Treasury note experienced a significant decline of 13 basis points on Wednesday, falling below its 20-day moving average (MA) due to a decrease in upward momentum.

The absence of short-term oversold conditions indicates there could be additional room for yields to drop towards an initial support level, identified by a Fibonacci retracement near 4.15%, analysts added.

Following this near-term retracement, expectations are set for the 10-year yields to establish a higher low compared to the support level around ~3.60% seen in September.

In the realm of exchange-traded funds (ETFs) focusing on China, both FXI and MCHI have shown short-term counter-trend 'buy' signals based on the TD Sequential model, hinting at a possible two-week rally. Nonetheless, a degree of caution remains as a meaningful corrective low is not yet confirmed.

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Source: Investing.com