Technical Analysis

S&P500 (SPX) Price Analysis – Oct 06, 2023

By LonghornFX Technical Analysis
Oct 6, 20233 min

Daily Price Outlook

The global market sentiment failed to stop its downward trend, and is still flashing red. Furthermore, the S&P 500, a key indicator of the U.S. stock market, reflects the state of the American economy and has recently shown noticeable instability. In addition, this volatility is an important way to gauge market conditions and indicates that there might be a turbulent period ahead.

Key Factors Affecting the S&P 500 in the Near Future

The S&P 500 has been experiencing frequent fluctuations, marked by its ups and downs. Moreover, investor confidence is being influenced by concerns related to the U.S. Federal Reserve's decisions on interest rates and the flow of economic data. Additionally, one significant factor causing market turbulence is the rise in U.S. Treasury yields.

These yields, which represent returns on government bonds, have been steadily increasing. Consequently, when yields go up, it raises worries about higher borrowing costs for businesses and individuals, which in turn creates uncertainty in the stock market. Therefore, investors are dealing with these uncertain market conditions.

Investors are keeping a close eye on several key factors that could influence the S&P 500 in the near future. Firstly, one of the most anticipated events is the monthly jobs report, which provides insights into the state of the U.S. labor market. Secondly, a strong job market can be seen as a positive sign for the economy, but it can also raise concerns about the Federal Reserve potentially raising interest rates.

Another factor to consider is corporate earnings reports. Furthermore, as we enter the third quarter, investors are eager to see how companies have been performing. Analysts are projecting a modest increase in earnings for S&P 500 companies compared to the previous year.

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

S&P500 (SPX) - Technical Analysis

On October 6, the S&P500 is trading at a price of 4387, as depicted in the 4-hour chart. Critical price points have emerged in the current landscape. The pivot point for the S&P500 is set at $4359. For those looking at potential barriers, there's immediate resistance at $4443, and following that, we have resistance levels at $4602 and $4686.

On the downside, the S&P500 sees its immediate support at $4203, with subsequent cushions found at $4116 and $3960.

From a technical standpoint, the Relative Strength Index (RSI) for the S&P500 stands at 34.59. This value, being below 50, signifies a bearish sentiment. However, approaching the 30-mark suggests the market could soon be in oversold territory, hinting at a potential trend shift or consolidation.

The current price of the S&P500 aligns closely with its 50-Day Exponential Moving Average (EMA) which is at $4387. This equilibrium suggests a possible turning point or decisive move in the offing.

Chart patterns further indicate a prevailing downward channel, supported by the selling indications from the 50 EMA, signifying potential continuation in the bearish momentum.

In conclusion, while the immediate trend for the S&P500 leans bearish, especially if prices remain below the pivot point of 4359, a break above this level might swing sentiments bullish.

Over the next trading sessions, the trajectory of the S&P500, based on its position relative to the 4359 pivot, could either lean towards the resistance at 4443 or seek the support zone near 4203.

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