S&P 500 (SPX) Soars 64% in Two Years: Key Trends and Insights
The S&P 500 (SPX) shows a strong uptrend. But are there also bearish signs?
S&P 500 (SPX) Continues Strong Rally, But Early Bearish Signals Emerge
Since its October 2022 low, the S&P 500 (SPX) has surged by over 64%, firmly establishing a robust uptrend. However, while the price action remains bullish, several technical indicators suggest caution.
The RSI has entered overbought territory, indicating that the market may be overextended in the short term. More importantly, the MACD histogram is beginning to tick bearishly lower this month, signaling a potential loss of bullish momentum. Despite this, the MACD lines remain bullishly crossed, reflecting that the longer-term trend is still intact.
Further confirmation of the broader trend comes from the EMAs, which continue to support the bullish outlook with an active golden crossover in play. While these signals reinforce the positive trajectory, the early bearish divergence on the MACD should not be ignored, as it could foreshadow a potential pullback or consolidation.
S&P 500 (SPX) at Risk of Correction: Bearish Divergence Signals Possible Pullback
The S&P 500 (SPX) has surged over 6% in the past week, continuing its strong performance. However, key technical indicators are now flashing warning signs that suggest a potential correction is on the horizon.The RSI on the weekly chart has formed a bearish divergence, indicating a weakening momentum despite the recent price surge. This divergence often precedes downward movement, making it a crucial signal for traders to watch.
Technical Indicators and Trends (Weekly Chart):
- MACD (Moving Average Convergence Divergence): The MACD lines remain bearishly crossed, and last week’s histogram closed lower, suggesting a loss of momentum. Interestingly, this week the histogram has started to tick bullishly higher, indicating some recovery, though it’s not yet enough to reverse the bearish setup.
- RSI (Relative Strength Index): The bearish divergence in the RSI further strengthens the argument for a potential correction.
- EMA (Exponential Moving Average): The EMAs are still bullishly crossed, confirming that the mid-term trend remains intact. This lends some support to the bullish case, but does not outweigh the immediate bearish signals from the MACD and RSI.
Should the SPX initiate a correction, it will find significant support at 5,500 and 5,350. If these Fibonacci levels fail, the index could retrace further to 5,111 and 4,700, the latter being a critical level that aligns with major Fibonacci retracement zones. Additionally, the 50-week EMA at 5,138 provides another potential support level that could help contain any downside pressure.
S&P 500 (SPX) Successfully Breaks Fib Projection Level, but Caution is Advised
The S&P 500 (SPX) has successfully broken through the Fib projection resistance at 5,639, marking another bullish milestone. However, if the SPX enters a retracement phase, it will find key support at the 50-day EMA, positioned just above the Fib level at 5,525.
Technical Indicators and Trends (Daily Chart):
- MACD (Moving Average Convergence Divergence): The MACD lines remain bullishly crossed, and the histogram continues to tick bullishly higher since yesterday, reinforcing positive momentum.
- RSI (Relative Strength Index): The RSI is currently in neutral territory, indicating that the market is not showing a strong directional bias, leaving room for potential price shifts either way.
- EMA (Exponential Moving Average): The golden crossover of the EMAs continues to underpin a bullish trend in the short-to-medium term, reflecting ongoing market strength.
Can S&P 500 (SPX) Rebound from Key Fibonacci Support Levels?
Even if the SPX experiences a short-term correction, it is likely to resume its upward trajectory after rebounding from the key Fibonacci support levels.
Technical Indicators and Trends (4H Chart):
- MACD (Moving Average Convergence Divergence): The MACD lines are bullishly crossed, but the histogram has begun to tick bearishly lower, signaling a potential short-term loss of momentum.
- RSI (Relative Strength Index): The RSI remains in neutral stance, hovering just below overbought territory, suggesting a cautious balance between bulls and bears.
- EMA (Exponential Moving Average): The golden crossover of the EMAs continues to confirm a short-term bullish trend, keeping the market outlook positive despite near-term fluctuations.
The SPX may face temporary downside pressure, but the broader trend remains bullish as long as the key support levels hold.
The S&P 500 (SPX) has shown remarkable strength, surging by over 64% since October 2022 and breaking key Fibonacci resistance levels, such as 5,639. Despite its impressive upward trajectory, caution is warranted due to early signs of potential retracement, as reflected in various technical indicators.