Are We Nearing a Top for the S&P 500 Index?

A quiet week for the S&P 500

The S&P 500 Index (SPY) closed last week at 2,425.18, posting a rise of 0.07% in the holiday-shortened week. The S&P 500 witnessed some selling pressure on July 6, 2017, as investors found a reason to sell after North Korea’s missile test.

The index fell 0.94% on July 6, but it recovered from this low after the solid US jobs report on July 7. Other economic data from the United States remained upbeat, with the Institute for Supply Management’s manufacturing and services PMI (purchasing managers’ index) beating expectations. The earnings that had begun to trickle in showed a promising start to 2Q17.

Are We Nearing a Top for the S&P 500 Index?

A fall in the rig count pushed crude prices below the $45.00 mark, causing some pain to the energy sector (XLE) (XOP). West Texas Intermediate crude oil (USO) fell 3.9% in the week.

Speculators increase their net positions in the S&P 500

According to the data released by the Commodity Futures Trading Commission (or CFTC), large speculators and traders have increased their net positions on S&P 500 Index (IVV) futures. Total net positions in the S&P 500 stood at 2,279 contracts on July 3, a rise of 466 contracts compared to the previous week. This was the highest level of bullish bets on the index in the last ten weeks.

Traders are betting on further gains in the index in the near term, and these bets likely increased after the solid jobs report on July 7.

The week ahead for the S&P 500

The upcoming economic calendar consists of US retail sales and the University of Michigan’s consumer sentiment and inflation data for June. These data should shed some light on current US economic conditions.

The key focus this week will be Janet Yellen’s testimony to the Senate Committee on Banking, Trade and Commerce and the House Committee on Financial Services, but we don’t expect any major changes in the Fed’s outlook.

Overall, we can likely expect the S&P 500 to continue in the 2,400–2,440 range.