S&P 500 Index Technical Outlook:
The S&P 500 Index is trending up nicely in the past five months, registering a total 54.7% gain from the trough observed in late March 2020. The index is about to challenge its all-time high of 3,390, which is a key resistance to watch from a technical point of view.
The index is trending up in an ‘ascending channel’ as highlighted in the chart below, the lower bound of which serves as a support level too. The overall trend remains bullish as its 20-, 50- and 100-Day Simple Moving Averages (SMAs) are all trending upward.
A meaningful breakout above the 3,390 resistance will help to open the door for more upside towards the next major resistance at 3.640 – the 261.8% Fibonacci extension level.
S&P 500 Index – Daily Chart
The momentum indicators, however, have flagged the risk of a potential technical pullback.
The MACD indicator formed a ‘bearish crossover’ last week (circle on the chart), which suggests that near-term momentum is biased more towards the downside.
The RSI indicator has turned south from the overbought zone beyond 70.0 this week, suggesting further pullback from the recent peak is possible.
Immediate support levels could be found at 3,358 (200% Fibonacci extension), followed by 3,270 (lower bound of the channel) and then 3182 (161.8% Fibonacci extension).
S&P500 Index – Momentum Indicators
Recommended by Margaret Yang, CFA
Don’t give into despair, make a game plan
— Written by Margaret Yang, Strategist for DailyFX.com
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