Can Our S&P500 Signal Survive the Stock Decline?

Stock markets turned bearish at the beginning of this year as central banks started raising interest rates, with the FED leading the way. Although, the global economy started to head into recession, with the US economy already there in H1 of 2022, so central banks started thinking about slowing down with rate hikes. That was a positive thing for stock markets and the sentiment improved, with the S&P500 turning bullish in July.

But the 200 SMA (purple) stopped the rally on the daily chart and SPX started retreating lower. We decided to buy the retrace lower, and the price started to reverse higher, but Jerome Powell’s comments at the Jackson Hole Symposium sent stock markets crashing lower last Friday.

S&P500 Daily Chart – Can the 100 SMA Hold as Support?

SPX rejected by the 200 SMA after the bullish momentum in July

• The Jackson Hole event devastated the market on Friday, and futures even opened with a gap down yesterday
• The majority of market participants are fearful at this stage, which might be a time for a contrarian Long, as S&P futures may be finding support at the VWAP shown.
• Betting on a relief rally, even if it is short term, is legitimate since the reward vs risk makes is fair play. Watch the stop loss and take profit targets within the following technical analysis video for Nasdaq at the start of the week, starting 29 Aug 2022

S&P500 crashed lower from around $,200 points to 4,000 lows, but the 100 SMA (green) is waiting there. So, we are keeping our buy signal here, hoping for a reversal higher.

US Stock Index S&P 500 Live Chart

ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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