Technical Analysis

S&P500 (SPX) Price Analysis – Oct 20, 2023

By LonghornFX Technical Analysis
Oct 20, 20233 min

Daily Price Outlook

The global market sentiment has continued its bearish performance, displaying mixed signals throughout the day. On Thursday, the Standard & Poor's (S&P) 500 equity index fell by 36.60 points, closing down 0.85% at $4,278. This downward trend can be attributed to several factors, with one notable element being the disappointment among stock traders.

Federal Reserve Chairman Jerome Powell failed to meet the dovish expectations regarding the Fed's rate outlook. Powell's inability to provide a more accommodating stance on interest rates has left investors uncertain, potentially resulting in increased volatility in the S&P 500.

Meanwhile, Israeli airstrikes in the Gaza Strip have heightened tensions in the region. Moreover, Israel has initiated missile strikes in Lebanon and Syria, while Egypt has also been impacted by the conflict, notably with the bombing of the Rafah border crossing. Therefore, the news of escalating tensions in the Middle East, marked by Israeli airstrikes and regional conflict, introduces uncertainty that could potentially have a negative impact on the S&P 500.

Fed Chair's Cautious Remarks and Market Expectations

It's worth noting that Federal Reserve Chair Jerome Powell gave somewhat cautious comments while speaking at the Economic Club of New York. He mentioned that the Fed's policies are still somewhat strict, but they're ready to take action if inflation starts to rise again. These statements surprised investors, as they were hoping for a more clearly dovish stance from the Fed.

Notably, markets are currently indicating a 97% probability that the Fed will keep interest rates unchanged at their next meeting. However, Wall Street is anticipating any hints that the central bank might accelerate future rate cuts, currently projected for the latter half of 2024.

Market Performance: Dow Jones and NASDAQ Decline

In the U.S. stock market, the Dow Jones Industrial Average (DJIA) fell by 250.91 points, representing a 0.75% decrease, and closed at $33,414.17. At the same time, the tech-heavy NASDAQ Composite saw a nearly 1% drop, with a loss of 128.13 points, ending the day at $13,186.18, marking a 0.96% decrease.

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

S&P500 (SPX) - Technical Analysis

The S&P 500 Index (SPX) begins its session at 4277.99, suffering a decline of 1.06% in the past 24 hours. Analyzing its price activity on a 4-hour chart provides key levels that traders should keep an eye on. The pivot point is detected at $4,369, acting as a pivotal juncture for the asset's next movements. For traders looking towards an optimistic turn, immediate resistance looms at $4,404, followed by subsequent barriers at $4,451 and $4,502. Conversely, any downside moves would encounter immediate support at $4,288, with further cushions at $4,216 and $4,172.

When it comes to the technical indicators, the Relative Strength Index (RSI) records a value of 39. This is an indication of a prevailing bearish sentiment, given that any value below 50 is considered as such. Delving into the MACD, the main line has nosedived below its signal counterpart, standing at -5.040 relative to the signal's -0.5900. This formation underscores a potential bearish momentum in the offing. Further accentuating the bearish tones, the price currently trades below the 50 EMA, which stands at $4,346, signifying a short-term bearish trend.

Presently, no distinct chart patterns have manifested to provide further directional clues. However, this can rapidly change as the market evolves.

In synthesis, the SPX is demonstrating a bearish inclination, especially if it remains below the 4319 mark. Conversely, climbing above could indicate a potential shift in market sentiment. In the immediate timeframe, we might anticipate the SPX to gravitate towards testing the resistance at $4,404, with breaches or rebounds here crucial for subsequent price actions.

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