S&P 500 futures reached a new record high in today's trading and the positive sentiment in the markets does not seem to be fading.
Democrats plan to continue working on President Biden's $1.9 trillion stimulus package to help the economy. Leaders from the Group of Seven industrialized nations will hold a virtual meeting on Friday to discuss the global response to the pandemic. While markets are reaching new highs, technical analysis is showing signs of caution. The S&P 500 is at record levels, but the Relative Strength Index indicator is showing a downward trend. At point A on the chart, the index has reached a new high and the RSI has risen above 70. Since then, the index has been making new highs and has reached point B.
However the RSI makes the opposite move and is lower at point B than at point A. This negative divergence may indicate that the markets are losing momentum and are ready to pull back. On the other hand, the 4,000 level on the S&P 500 index serves as a magnet and the index could reach this new record first before investors realize gains.