By Senad Karaahmetovic
The S&P 500 and Dow Jones Industrial Average are up 1% in early Tuesday trading while Nasdaq Composite Index trades 0.9% higher.
Despite today's strength, Fairlead Strategies sees limited upside in the S&P 500 in the short term.
“We expect the bounce to run out of steam this week,” the analysts wrote in a note to clients.
The S&P 500 looks set to test the 4000 handle. The index closed 0.9% higher yesterday with Vital Knowledge saying that the “underlying price action was even stronger than it appeared on the surface.”
“There’s a sense of calm sweeping over the tape thanks to the collective actions taken by regulators and central banks over the last 1.5 weeks,” analysts there said.
However, they urge investors to manage risk at current levels.
“The weekly stochastics still point lower with room to oversold levels, so we would be managing risk noting next major support is ~3505.”
They also expect indices to lose support from mega-caps given the near-term overbought levels.
The S&P 500 is up about 3% year-to-date (YTD).