Technical Analysis

S&P500 (SPX) Price Analysis – June 21, 2024

By LonghornFX Technical Analysis
Jun 21, 20244 min

Daily Price Outlook

The S&P 500 index continued its downward trend, remaining under pressure around the 5,473 level and hitting an intra-day low of 5,455. The losing streak can be attributed to economic uncertainties, including disappointing data releases. This decline reflects a cautious shift in investor sentiment after a period of record highs and optimistic market conditions.

Impact of Disappointing US Economic Data and Bearish US Dollar on S&P 500

On the US front, the release of poor US economic data revealed weaknesses in employment, housing, and manufacturing sectors. Investors responded cautiously by adjusting their portfolios, reflecting concerns about future economic performance. This cautious reaction in financial markets suggests broader implications beyond immediate market movements, influencing policy decisions and consumer confidence in the coming months.

The Federal Reserve's stance on monetary policy also came under scrutiny. Despite earlier expectations of a potential rate cut, the mixed economic data complicated the outlook. While some market participants priced in a rate reduction later in the year, the overall uncertainty weighed on investor sentiment, contributing to the day's downturn in the S&P 500.

Furthermore, the US Dollar weakened as a result of these economic concerns. A weaker dollar typically benefits multinational corporations within the S&P 500 by making their exports more competitive and boosting overseas earnings. However, in this instance, the broader market sentiment overshadowed potential currency advantages, as investors focused more on domestic economic fundamentals and their implications for future corporate profitability.

On the economic data front, the US Department of Labor reported that new applications for unemployment benefits dropped to 238,000 in the week ending June 15, slightly surpassing the expected 235,000. Meanwhile, the Commerce Department's Census Bureau indicated a 5.2% decline in Housing Starts for May, falling to a seasonally adjusted annual rate of 982,000 units. Building Permits also decreased by 2.9% to 949,000 units during the same period. Additionally, the Philadelphia Fed Manufacturing Index unexpectedly fell to 1.3 in June from 4.5 the previous month, marking its fifth consecutive month in positive territory despite the decrease.

Looking ahead, investors will closely monitor upcoming economic reports, including flash PMI prints and existing home sales data, for further insights into the health of the global economy and potential implications for future market movements. The Federal Reserve's upcoming decisions on monetary policy will also be pivotal in shaping investor sentiment and market direction in the coming months.

S&P 500 Price Chart - Source: Tradingview
S&P 500 Price Chart - Source: Tradingview

S&P 500 - Technical Analysis

The S&P 500 (SPX) is currently trading at $5473.16, down 0.25% in the latest session. The pivot point, marked by the green line at $5479.02, serves as a crucial threshold for market sentiment. Immediate resistance levels are observed at $5507.58, $5526.25, and $5547.12, indicating potential selling pressure points if the index attempts to rally. On the downside, immediate support is found at $5447.72, with further support at $5420.65 and $5402.45, which could act as buy zones should the index decline further.

Technical indicators show that the Relative Strength Index (RSI) is at 62, suggesting the market is nearing overbought territory, but not yet excessively so. The 50-day Exponential Moving Average (EMA) is positioned at $5391.17, reinforcing the current bullish trend as the index price remains above this average. This technical landscape suggests that while the S&P 500 maintains an overall upward momentum, the immediate drop below the pivot point hints at potential short-term weakness.

Traders might consider a sell limit order at $5478, just below the pivot point, with a take profit target at $5447 and a stop loss at $5505. This strategy is supported by the RSI indicating potential for a downward correction and the presence of immediate resistance above the pivot point.

In summary, the S&P 500 is currently exhibiting mixed signals with a slight downward bias below the pivot point. The index’s movement around the key levels of $5479.02 will be critical in determining its short-term direction. The current technical indicators suggest a cautious approach, with the potential for a corrective decline if resistance levels hold and the index fails to reclaim the pivot point.

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