S&P 500 Gains Momentum: Technical Indicators and Sentiment Signal Resilience

The S&P 500 is firing on all cylinders as September 2025 shapes up to be one of its strongest months in over a decade. Technical indicators and investor sentiment metrics are aligning to paint a picture of robust momentum and market resilience, even as lingering caution among investors suggests the bulls aren't entirely unopposed. Let's break down the numbers and what they mean for the near-term outlook.

Technical Indicators: A Bullish Tapestry

The Relative Strength Index (RSI) for the S&P 500 currently stands at 64.4, comfortably above the 55 threshold that many technicians associate with bullish momentum, according to Aiolux technical indicators. This suggests the index is in a phase of constructive strength, though not yet overbought (which would trigger a reading above 70). Meanwhile, the 50-day moving average sits at 6,384.89, up 15.90% year-on-year, while the 200-day moving average has climbed to 5,984.93, reflecting a 15.83% annual gain, according to a Wall Street Numbers chart. These moving averages, both trending higher, form a "golden cross" setup that historically signals a bullish trend.

The Moving Average Convergence Divergence (MACD) adds further fuel to the fire. As of September 26, 2025, the MACD value for the S&P 500 is 60.4, above its signal line and above zero - a reading noted in the AAII Sentiment Survey. This confirms that the index's upward momentum is not only intact but accelerating. For context, the MACD is calculated using the 12- and 26-day exponential moving averages, with the signal line derived from a 9-day EMA of the MACD itself, as explained in Moneycontrol technical analysis. A positive MACD above its signal line is a classic buy signal, and the fact that it remains above zero suggests the bulls are in control.

Investor Sentiment: Optimism, but Caution Lingers

The AAII Investor Sentiment Survey for the week ending September 24, 2025, reveals a market in flux. Bullish sentiment rose to 41.7%, above its historical average of 37.5%, while bearish sentiment fell to 39.2%, still above its average of 31.0%. This divergence is telling: investors are cautiously optimistic but not blindly exuberant. Neutral sentiment, at a rare low of 19.1%, underscores the lack of consensus, with many investors hedging their bets.

The put/call ratio tells a similar story. As of September 9, 2025, the ratio stood at 1.27, indicating more bearish positioning. However, over the preceding five days, the ratio (based on open interest) spiked to 1.8, above its 52-week average of 1.7. This suggests that while investors are buying puts for protection, they're also maintaining call positions, reflecting a nuanced approach to volatility. The open interest for SPX put options grew by 0.5% to 13.6 million contracts, while call open interest rose 0.3% to 7.8 million. This duality-defensive positioning alongside bullish bets-highlights the market's resilience in the face of uncertainty.

The Fed's Role and Market Psychology

The Federal Reserve's recent 0.25 percentage point rate cut has further stoked optimism. According to the AAII survey, 49.8% of investors believe the move was appropriate. Lower rates typically buoy equities by reducing borrowing costs and boosting corporate profits, but they also risk inflationary pressures. The market's mixed reaction-bullish sentiment rising while put buying persists-reflects this tension. Investors are clearly betting on the Fed's ability to navigate this tightrope, but they're not entirely confident.

Conclusion: A Tug-of-War Between Caution and Confidence

The S&P 500's technicals are undeniably strong, with RSI, MACD, and moving averages all pointing higher. Investor sentiment, however, tells a more complex story. While optimism is rising, the elevated put/call ratio and bearish sentiment above historical averages suggest that investors remain wary of potential headwinds. This duality creates a compelling setup: the bulls have the upper hand, but the bears aren't entirely out of the game.

For investors, the key takeaway is to stay nimble. The S&P 500's momentum is real, but the market's resilience will be tested if macroeconomic data or geopolitical risks flare up. For now, the technicals and sentiment metrics suggest a continuation of the upward trend-but with a healthy dose of caution.