S&P 500 Technical Analysis

On Thursday, the S&P 500 saw a volatile trading session, reaching an intraday high of 4195.49 before losing some gains. This loss can be attributed to some investors taking profits, looking to lock in their gains from the bullish trend. However, the selling pressure continued into Friday, causing the index to fall from its high of 4182.40.

According to technical analysis, the S&P 500 index is in a short-term downward trend, as seen on the daily chart. In addition, the index trades below the 50-day moving average, a widely used indicator that helps traders identify the trend. This trend will be considered bearish if the index continues to trade below the 50-day moving average.

The next significant support level for the index is at 4100, where buyers are expected to step in and prevent the price from falling further. If the price falls below this 4100 level, the trend is expected to continue in a downward direction.

On the other hand, if the price holds above this level, it will be considered a bullish sign, and traders may look to buy the index. The Relative Strength Index (RSI), a popular momentum indicator, also indicates a bearish trend as it has fallen below 50. This number suggests that the selling pressure will likely continue in the short term.

The trend of the S&P 500 index will depend on whether it can hold above the significant support level at 4100. Traders will closely monitor this level to determine the strength of either the buyers or the sellers and position themselves accordingly. In addition, the confirmation candle formation on Monday will also give a better indication of the future trend of the market.

Geopolitical Tensions

The ongoing geopolitical tensions could create uncertainty and volatility in the stock market, affecting the performance of the S&P 500 index. The impact of this political event on the stock market could be significant, as trade relations between the United States and China play a crucial role in the global economy.

The balloon incident late last week indicates the growing tensions between the two countries, and investors are becoming concerned about the possibility of a new trade war. Investors are now closely monitoring the situation, waiting for more clarity on the future of US-China trade relations.

If the relationship between the two countries does not improve, it could negatively impact the stock market and result in a decline in the S&P 500 index. On the other hand, if the situation is resolved and trade relations between the two countries improve, the stock market and the S&P 500 index could recover, and the bullish outlook could become a reality.