The S&P 500 Index (SPX) has closed above its 50-day moving average (50dma) for consecutive days, according to a recent chart from Goldman Sachs’ Security Technology (GS S&T). While this may seem like a bullish sign, it’s important to consider the potential implications and whether this streak will continue or if it’s a false dawn.

Firstly, let’s take a closer look at the chart provided by GS S&T. As shown in the image, the SPX has closed above its 50dma for five consecutive days, which is a significant milestone. The last time the SPX achieved this feat was in May 2019, which marked the beginning of a strong rally that saw the index surge by over 30% in the following months.

However, it’s important to note that this streak is not unprecedented. In fact, there have been several instances in the past where the SPX has closed above its 50dma for an extended period of time, only to reverse course and fall back below the moving average. For example, in 2018, the SPX closed above its 50dma for 14 consecutive days before falling by over 10%.

So, what could be driving this latest streak? One possible explanation is that investors are becoming more optimistic about the future prospects of US stocks. With the economy growing steadily and corporate earnings expected to remain strong, it’s no wonder that investors are feeling more confident in their investments. Additionally, the recent interest rate cut by the Federal Reserve has also helped to boost sentiment, as lower borrowing costs can lead to increased spending and investment.

However, there are also potential risks to consider. For example, the SPX has reached historically high valuations, with its price-to-earnings (P/E) ratio standing at over 25. While this may not be a cause for concern in itself, it does suggest that investors are paying a premium for every dollar of earnings, which could lead to a correction if earnings fail to meet expectations.

Another risk to consider is the potential impact of geopolitical events. The ongoing trade tensions between the US and China, as well as the conflict in the Middle East, have the potential to disrupt global supply chains and dampen investor sentiment. If these risks materialize, it could lead to a reversal of the recent gains and a fall below the 50dma.

While the consecutive days above the 50dma is a bullish sign, it’s important to consider the potential implications and risks involved. While the current streak may continue, it’s also possible that this could be a false dawn, with the SPX reversing course and falling back below the moving average. As always, investors should exercise caution and diversify their portfolios to minimize risk.