S&P 500 Technical Analysis – The pullback extends further

Fundamental Overview

The S&P 500 has been on the backfoot recently as the goldilocks data led to a strong rotation into small caps stocks. Yesterday, there was general weakness across all the indices although it wasn’t triggered by any catalyst. The fundamentals haven’t changed, on the contrary, they strengthened the case for a soft landing. People got too used to 1% pullbacks, but 3 to 5% pullbacks are normal.

S&P 500 Technical Analysis – Daily Timeframe

On the daily chart, we can see that in case pullback deepens further, the buyers will find a good support zone around the 5500 level where we can find the confluence of the trendline and the 38.2% Fibonacci retracement level. The sellers, on the other hand, will want to see the price breaking below the trendline to increase the bearish bets into the 5200 level next.

S&P 500 Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the bearish momentum increased on the break of the minor trendline as the sellers added to the bearish bets. The price is testing a support zone around the 5580 level where the buyers are piling in with a defined risk below it. If the price were to break lower, the sellers will likely increase the bearish bets into the 5500 support next.

S&P 500 Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we now have a minor downward trendline defining the current bearish momentum. If we get a bounce from the 5580 support, we can expect the sellers to lean on the trendline to position for a break below the support with a better risk to reward setup.

The buyers, on the other hand, will want to see the price breaking above the trendline to increase the bullish bets into a new all-time high. The red lines define the average daily range for today.