Stocks continued to advance for the fifth week enabling major indices to recover all the loss since beginning of the year. The gains were attributed to rising oil prices and Federal Reserve's decision to reduce frequency of rate hikes this year. For the week S&P 500 index closed at 2049, up 1.35%, Dow Jones Industrial Average gained 2.26% while technology laden NASDAQ composite index increased 0.99%.
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| Weekly chart of S&P 500 index |
S&P 500 index closed right at 2050, the resistance level that we mentioned last week. In the rally last year, this level was a very strong support which was tested several time so we will see how the index reacts to this resistance level in the next couple of weeks. At this moment, the chart pattern looks favorable as the STO momentum indicator is still heading upwards and has not reached the overbought area. However, with the rebound going up so fast, there usually comes a consolidation period to digest the gains.
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