The U.S. S&P 500 stock index is testing a technical support zone ahead of this week’s major data releases!
Will this week’s events help extend the index’s uptrend?
Or are the bears gearing up for a sharper downswing?
S&P 500 Index (US500): Daily
S&P 500 Index (SPX500) Daily Chart by TradingView
A combo of global growth concerns, U.S. dollar recovery, and a bit of profit-taking helped drag the S&P 500 stock index lower in the past few days.
The index, which hit new record highs just under 5,700 in mid-July, is now trading closer to the 5,450 mark.
That’s around the Pivot Point line, 50% Fibonacci retracement of the last upswing, and a trend line support that’s been around since late 2023!
Are equity bulls just taking a breather?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on market sentiment and U.S. equities, then it’s time to check out the economic calendar and stay updated on daily fundamental news!In the next few days, we’ll see another batch of U.S. earnings reports including those from Apple, Amazon, Alphabet, and Meta Platforms – four of the closely watched “Magnificent 7” – stocks. Earnings from Pfizer, Ford, and ExxonMobil may also increase equities’ volatility.
Meanwhile, U.S. reports like the JOLTS job openings and Fed policy decision could influence overall risk-taking behavior in the markets.
Risk-friendly headlines, combined with bullish candlesticks above the trend line support, expose the stock index to potential bullish momentum all the way to the 5,600 inflection point if not its previous highs below 5,700.
But if this week’s themes encourage risk aversion or stock-selling, the US500 may extend its downswing.
Look out for bearish candlesticks below 5,400 or sustained trading below the trend line and 100 SMA support zones for clues that we’re in for a longer-term bearish swing.
In case of a trend line support breakout, the S&P 500 may dip back to the 5,325 or 5,235 previous areas of interest.
However you choose to trade this setup, make sure you’re following your trading plan and using your best risk management moves so you can trade for another day!