Technical Analysis

S&P500 (SPX) Price Analysis – July 24, 2023

By LonghornFX Technical Analysis
Jul 24, 20233 min

Daily Price Outlook

The S&P 500 index experienced a slow movement as investors eagerly awaited crucial events that could shape market sentiment and direction. On Monday, SPX is rising by +0.03% gains at 4536.34, this little change reflects the cautious stance of traders.

The previous week saw a mixed performance among the major indices. The Dow Jones Industrial Average managed to extend its winning streak for ten consecutive days, the longest since 2017, albeit with a mere 2.51-point gain. On the other hand, the S&P 500 closed the week with a modest 0.7% increase, while the Nasdaq Composite recorded a 0.6% decline. These fluctuations indicate a hesitant market sentiment, with investors treading cautiously.

Market experts have been noting a potential shift in investor sentiment towards a more bearish outlook. The profit-taking attitude has been particularly evident among investors who have enjoyed impressive returns from tech and FAANG stocks.

The slow movement in the S&P 500 index can also be attributed to the anticipation surrounding the Federal Reserve's policy decision. The slight improvement in price of index might be due to the ongoing expectations of potential rate hike in the upcoming Fed meeting.

Additionally, the release of the personal consumption expenditures index, the Fed's preferred inflation gauge, further contributed to the cautious atmosphere.

Moreover, the ongoing earnings season played a significant role in the index's sluggishness. With a busy week ahead, including financial updates from major companies like Alphabet, Microsoft, and Meta, as well as significant pharmaceutical, industrial, and big oil firms, investors remained on the sidelines, awaiting corporate performance indicators that could influence market trends.

S&P500 (SPX) Price Chart – Source: Tradingview
S&P500 (SPX) Price Chart – Source: Tradingview

 S&P500 (SPX) - Technical analysis

Taking a look at the technical side of the S&P 500, it is currently trading around the 4535 support level. This particular support divergence is being extended by the 23.6% replacement ratio.

However, upon examining the relative strength index (RSI) and moving average convergence and divergence (MACD) indicator, both of them are showing overbought conditions, suggesting that the chances of a bearish correction remain strong.

At the moment, the 23.6% retracement level, as well as the 50-day exponential moving average, are providing immediate support around 4535. In the event of a bearish break below this level, the SPX price is likely to be exposed to the 38.2% or 50% retracement levels, which are at 4506 and 4484 respectively.

An alternative scenario is a bullish break above the 4580 resistance level, which would likely expose the S&P 500 index towards the 468 or 466 resistance levels.

Therefore, we should monitor the 4535 level closely, as a bearish break below this support could present a selling opportunity. On the other hand, if the support holds, we can also consider a buying opportunity.



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