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Will Bullish S&P 500 Technicals Spur Buying Spree?

This article was originally published on ETFTrends.com.

Last week, the S&P 500 reached a key bullish technical level, moving past its 200-day moving average for the first time since December 3. Will this latest move spur a buying spree of investors for fear of being late to the party?

The S&P 500 was down 6.2 percent to end 2018, but it has since recovered after U.S. equities were roiled by volatility to close the year. To some technical analysts, breaking through that 200-day moving average paves the way for bigger gains ahead. In December alone, the S&P 500 was down 9 percent, making it the worst December for the index since 1931.

Through last Friday's session, the S&P 500 is now up 10.72 percent. Traders who have been able to capitalize on the year-end weakness in 2018 are seeing the benefits, but a fresh batch of latecomers may be entering the fold.

"It seems a 'panic buying' mood, with purchases by investors who had been lagging the broader market, has strengthened," said Masanari Takada, a cross-asset strategist at Nomura. "Systematic trend followers that had temporarily suspended buying after the weak US retail sales print have also been compelled to follow the market by adding fresh longs."

 Related: Industrial ETFs Are Outperforming Among U.S. Sector Picks

An early sign of bullishness came after the S&P 500 broke past the 2,700 level over a week ago. Other technical analysts are seeing positive signs of more upside to come despite any pullbacks that may come.

According to Takada, investors might be keen to buying the dips through the rest of February and into early March.

"We believe as a short-term trading strategy of buying on dips from end-February to beginning-March targeting a subsequent return-reversal is attractive," said Takada.

How high can the S&P 500 go from here? According to Craig Johnson, a chief market technician at PiperJaffray, a key level to watch next will be the 2,800 mark.,

"At this juncture, the SPX has successfully recaptured the 200-day MA after reversing a downtrend off the October highs," said Johnson. "Further upside from here leaves the 2,800-2,815 range as the next major hurdle for the index to clear."

Traders can take advantage of forthcoming market oscillations with leveraged S&P 500 ETFs, such as the Direxion Daily S&P 500 Bull 2X ETF (SPUU) , Direxion Daily S&P500 Bull 3X ETF (SPXL) for gains and the Direxion Daily S&P 500 Bear 1X ETF (SPDN) for declines.

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