Stock market outlook: Analyst says S&P 500 is facing resistance at 4000

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Hedge funds are finally starting to believe in the stock market's latest rally, but one analyst warns that any move higher will be fleeting

US stocks have so far turned a new leaf in 2023, and hedge fund investors are starting to take notice, according to Ned Davis Research.is up 3% year-to-date, and is up 13% from its mid-October low. Over that same time period, short positioning among hedge funds and leveraged funds has fallen, according to a Wednesday note from NDR.

"Institutional investors have been covering their shorts and have their biggest net long position since May 2022," NDR said."While still below the long-term average of 12.7%, it represents a stark change from six months ago." But as asset managers start to buy into the latest stock market rally, technical analyst Katie Stockton of Fairlead Strategies warns that any further rally in equities could be fleeting. That's because the S&P 500 is heading towards a very important resistance level at the psychologically round threshold of 4,000.

While she admits upcoming catalysts could spark a further rally in stock prices this week, the jump higher should be short lived.and Friday's bank earnings, and if they instill a rally, we expect it to fail around initial resistance near 4,000," Stockton said.

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KEY: Fairlead’s Katie Stockton: S&P 500 is experiencing Short-Term Overbought conditions, which will make it 'more challenging for the rally to be sustained, as intermediate-term momentum has fallen off since early December.' stockmarkets stocks investing investment

Even bearmarkets have nose bleeding rallies which sucker buyers in. Let's see where we are in June. Caveat Emptor.

Everything these people say practically is fleeting if not entirely inaccurate. So there's that.

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