Technical Analysis

S&P500 (SPX) Price Analysis – May 24, 2024

By LonghornFX Technical Analysis
May 24, 20243 min

Daily Price Outlook

The S&P 500 index continued its bearish rally, remaining under pressure around the 5,267 level and hitting an intra-day low of 5,256. This downward trend was primarily driven by concerns over Federal Reserve actions on interest rates, escalating geopolitical tensions, and uncertainties surrounding US economic data.

These factors influenced investor sentiment and contributed to the bearish performance of the S&P 500 index.

Geopolitical Tensions Escalate, Adding Pressure to S&P 500

On the geopolitical front, escalating tensions in both the Middle East and the Asia-Pacific region intensified the bearish pressure on the S&P 500 index. Heightened conflict in the Middle East, notably the ongoing Israel-Palestine conflict, raised concerns about global stability.

Additionally, tensions between China and Taiwan escalated, with reports of Chinese fighter jets conducting simulated strikes in the Taiwan Strait and surrounding areas. These geopolitical uncertainties rattled investor confidence, adding downward pressure on the S&P 500 index.

Strong US Economic Data and Potential Interest Rate Changes Influence S&P 500

Despite the bearish sentiment and geopolitical tensions, strong US economic data provided some support to the S&P 500 index. The upbeat figures, including a drop in initial jobless claims and an increase in both manufacturing and services PMI, highlighted the resilience of the US economy.

However, these positive indicators also fueled concerns about potential interest rate hikes by the Federal Reserve to curb inflationary pressures.

Market expectations shifted towards the prospect of the Fed maintaining rates, indicating uncertainty regarding the future trajectory of monetary policy. This uncertainty led to increased fluctuations in the S&P 500 index and ultimately contributed to its overall decline.

SPX Price Chart - Source: Tradingview
SPX Price Chart - Source: Tradingview

S&P500 (SPX) - Technical Analysis

The S&P 500 is currently priced at $5267.85, down 0.74%. The market's technical outlook presents a cautious picture as the price is trading below the pivot point of $5297.60. Immediate resistance is noted at $5342.04, with further resistance levels at $5380.93 and $5419.82.

On the support side, the immediate level is at $5246.67, followed by $5212.41 and $5180.58.

The Relative Strength Index (RSI) is at 54, indicating a neutral momentum, neither overbought nor oversold. This neutral RSI suggests that the market could move in either direction depending on upcoming market catalysts.

The 50-day Exponential Moving Average (EMA) is positioned at $5168.56, which provides a significant support level that traders will be closely monitoring.

Given the current technical indicators, a strategic approach would be to sell below $5287, aiming for a take-profit level of $5215 while setting a stop-loss at $5350. This approach capitalizes on the potential for further downside while managing risk appropriately.

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