S&P500 Outlook: Bulls Reclaim 200-Day MA as Nvidia Earnings Loom

US cash equities will be closed today for Memorial Day, but the futures are open (but close earlier than usual) and have fired up early in the week. Trump’s call to push back the proposed start date on the 50% tariff rate on imports from the EU to 9 July, and to align with the deadline for the 90-day pause on ‘reciprocal’ tariffs fuelling an early rally in risk assets.

A more constructive technical picture

The technical set-up (S&P500) was looking dicey at Friday’s close, with price breakdown through the rising wedge pattern and below Thursday’s ‘doji’ candle – rectifying the indecision expressed in the price action and highlighting that the sellers went into the weekend largely in control of the tape.

It is obviously early in the week and volumes in the underlying futures are poor, but the moves so far see the S&P500 breaking above Friday’s high (5856), with the index also breaking the trend of lower highs drawn from the 20 May high (seen on the 4-hour chart above) - with momentum subsequently starting to kick back to the upside.

The technical set-up is therefore looking quietly constructive – that said, taking long positions based on intel derived from the higher timeframes remains an aggressive play - partly because US cash equities and bonds are closed, but also because of the known event risk due out this week.

Clients positioning in both the US500 and NAS100 indices is finely balanced, with a 53%/47% split in open long/short exposures. This speaks to the perceived two-way risk in the technical set-up and the current lack of underlying trend, with some hesitation to go hard on a directional view ahead of the week's known event risks.

The bull/upside case for the S&P500 this week

Those set in long positions will be hopeful that the early goodwill expressed in US equity futures pricing from the rollback of the EU tariff start date can kick higher and build. They will also be keen to see the collective recognise Trump’s fiscal measures as firmly pro-growth, and while the ‘Big, beautiful tax bill’ that is set to be reworked in the Senate will increase the deficit and future interest expense, these dynamics are manageable, with the fiscal impulse set to support the US economy through 2026 and in turn keep earnings expectations in check.

Longs will also be keen to see improved demand at this week’s US 2-, 5- and 7-year Treasury auctions, resulting in lower US bond yields. They will also be keen to see a solid beat and raise in Nvidia’s earnings on Wednesday (due 20 minutes after the US cash equity close). The options market implies a -/+7% move in Nvidia’s share price on the day of earnings, which given its $3t market cap and weight on the S&P500 and NAS100 would be a clear event risk for those trading Nvidia 24-hour share CFDs, as it would the US500 and NAS100.

For more intel, see our Nvidia earnings preview.

The bear/downside thesis for the S&P500 this week

Those set in short positions will naturally be keen to see the opposite play out, with a view that the US 10yr Treasury yield could rise above 4.5% - driven by further concerns of rising inflation risk, higher deficits and increased Treasury supply in 2026 (to fund the increased deficit levels and interest expenses). They would be looking for a poor reaction to Nvidia’s numbers on Wednesday.

Trading bias:

I am skewed towards long positions at this juncture, potentially adding to longs on a daily close above 5920. Conversely, I would certainly reassess and potentially reverse this view on a daily close below the 200-day MA, with short conviction levels increasing on a daily close below Friday's intraday low of 5741.