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Fan Yang

S&P500 - Where to Anticipate Support

Markets sentiments  have been vulnerable as we assessed last week. We anticipated a bearish outlook for the S&P500. This tariff talk definitely showed how sensitive the market was. The S&P500 $SPX for example took a tumble after already retreating last week. Where might we find support?

S&P 500 Daily chart

(click to enlarge)

Short-term to Medium-term Bearish Market:
- The S&P500 has been bullish in 2017, but capitulated after rallying to almost 2880 in late January.
- Since then, it has been in a bearish correction mode. We are in another bearish leg now.
-  I think we should first monitor for support in the 2580-2600 area, which involves a support/resistance pivot and possibly the 200-day simple moving average. 
- On the weekly chart below, we see that there could be a rising trendline support as well in this area. 
- Meanwhile, the daily RSI will likely be around 30, which could convince the market SPX is oversold.
- Looking at the weekly chart, we should also anticipate support when the RSI approaches 40. 
- In the long-term the S&P 500 is still in a secular bull run. If this long-term momentum persists, the weekly RSI will likely hold above 40.
- Now, if price does not hold at 2580, the next key support will be around 2490-2500.

S&P 500 Weekly Chart

(click to enlarge)

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