AI Chip Surge Keeps S&P 500 Bulls Aiming at 8,150 as Housing Cools

We still see the S&P 500 Index being carried by tech, in this case AI semiconductors with Micron and AMD providing some firepower. 8,150 is in sight over the next couple of months. Housing is cooling, macro activity is improving, and while in the short term the Renko setup looks stretched, I’d still treat pullbacks as buying opportunities.

Heat Map Shows AI Leadership

Semiconductors are lighting the way for the S&P 500 Index. Micron is the leader for today, up 17.50%, after AI memory demand and a major UBS price target hike pushed the stock vertically. Also, AMD is up 5.65%, helped by the same AI-chip momentum. Additionally, Applied Materials is up 4.13%, fitting the semiconductor equipment theme as investors keep paying up for anything tied to advanced chips, high bandwidth memory, and AI infrastructure.

However Nvidia is down 1.05%, Amazon is down 0.93%, energy names like XOM and CVX are weak and the consumer side in general looks a bit patchy.

Semiconductor Winners Lead The S&P 500 Heat Map As Energy, Retail, And Some Staples Lag

Chicago Fed Index Improves

There was improvement in the Chicago Fed Index as it increased to 0.14 from the prior -0.15. A positive reading suggests that activity is running above trend, which gives the S&P 500 Index a better macro backdrop than the housing chart alone would imply.

Chicago Fed National Activity Index Rebounds to 0.14 After A Negative Prior Reading

Housing Data Cools

The Case-Shiller Home Price YoY chart shows a softer housing print, with the actual reading coming in at 0.8%, below the 1% forecast and slightly under the prior 0.9%. This gives a little more breathing room on the rate cut front.

Case-Shiller Home Price Growth Slows to 0.8%, Missing The 1% Forecast

Renko Trend Stays Bullish

From a Renko perspective the S&P 500 Index is in an upward trend and momentum is positive, although it is looking a bit stretched. I can say that it is in a short and medium term uptrend as the Supertrend is green/positive and the Renko bricks are above both the 50-SMA and 500-SMA.

Moreover, I can say the momentum is positive because the RSI is above 60 and the Z-Score SMA is trending higher. But the RSI is nearing overbought levels. The Z-Score SMA as well. So be preparing for some sort of pullback in the near term. It may be up to 3%. And it may be a buying opportunity.

S&P 500 Index 20-Brick Renko Shows Price Holding Above Major Moving Averages

The Verdict

Current Trend Direction: Bullish

Bias: Positive

Support Levels: 7,240, 6,780, 6,310

Resistance Levels: 7,450, 8,150

Medium Term Path: In the medium term I see the S&P 500 Index moving higher. Not necessarily straight up, but an ebb and flow towards 8,150. First we need a proper weekly close above 7,450. That would help alot. We may not get it this week as the momentum indicators on the Renko are getting stretched. Once the bulls get their breather and there is renewed momentum, we can see 8,150 with a clear path.