S&P 500 Sees Possible Bearish Signs Like the ‘Mini Death Cross’
We recently had the lack of a so-called “Santa Claus Rally,” an omission that’s historically a negative sign for stocks. And now, the S&P 500 
SPX -- the broadest large-cap U.S. equity index -- has developed a pattern of bearish reversal as well.
Check out the SPX’s chart going back six months through Wednesday (Jan. 8):
Readers will see that the S&P 500 developed a head-and-shoulders pattern of bearish reversal in late October and stretching into 2025, as denoted by the three purple triangles to the right of the above chart.
This pattern displays a neckline/pivot point of 5,827 -- slightly above the 5,810.68 that the S&P 500 was trading at midday Friday, but even with a 23.6% Fibonacci retracement of the index’s August low to its December high.
This 23.6% Fibonacci level (denoted by one of the thick blue horizontal lines at the chart’s left) makes the SPX’s 5,827 level all that much more important as a potential pivot.
Pivot points typically represent where support or resistance show up for a stock or index, depending on the price action’s direction. A pivot point can also act like an accelerant or slingshot if the stock or index breaks the pivot level.
Elsewhere in the above chart, readers will see that the S&P 500’s Relative Strength Index (the gray bar at the chart’s top) was neutral as of Wednesday's close.
However, the index’s daily Moving average Convergence Divergence indicator -- or “MACD,” denoted by the black and gold lines and blue bars at bottom -- had repositioned itself to appear more bearish.
The histogram of the index’s 9-day exponential moving average -- or “EMA,” marked with blue bars at the chart’s bottom -- was running below zero. That’s often reflective of a recent loss of upward momentum.
Meanwhile, the 12-day EMA (the black line at the chart’s bottom) moved below the 26-day EMA (the gold line). That’s a historically bearish move.
Additionally, the S&P 500 is undergoing what’s called a “swing traders' cross” or “mini death cross.” That’s a bearish “cross-under,” where a stock or index’s 21-day EMA (the green line in the chart above) moves below its 50-day Simple Moving Average (or “SMA,” marked with a blue line above).
Where Does the S&P 500’s Chart Show Support?
With Friday’s break below the above chart pattern's neckline, the S&P 500’s next key support level could be 5,605 -- the “half-way back point” or a 50% retracement of the index’s August-to-December run. (While common, 50% retracements are not true Fibonacci levels.)
(At the time of writing this column, Moomoo Technologies Inc. Markets Commentator Stephen “Sarge” Guilfoyle had no positions in S&P 500 ETFs or index funds.)
Indexes are unmanaged and cannot be directly invested into. Past performance is no indication of future results. Investing involves risk and the potential to lose principal.
This article discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve. Specific security charts used are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. Moomoo and its affiliates make no representation or warranty as to the article's adequacy, completeness, accuracy or timeliness for any particular purpose of the above content. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct. Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. In the U.S., investment products and services on Moomoo are offered by Moomoo Financial Inc., Member FINRA/SIPC.
TradingView is an independent third party not affiliated with Moomoo Financial Inc., Moomoo Technologies Inc., or its affiliates. Moomoo Financial Inc. and its affiliates do not endorse, represent or warrant the completeness and accuracy of the data and information available on the TradingView platform and are not responsible for any services provided by the third-party platform.
SPX -- the broadest large-cap U.S. equity index -- has developed a pattern of bearish reversal as well.Check out the SPX’s chart going back six months through Wednesday (Jan. 8):
Readers will see that the S&P 500 developed a head-and-shoulders pattern of bearish reversal in late October and stretching into 2025, as denoted by the three purple triangles to the right of the above chart.
This pattern displays a neckline/pivot point of 5,827 -- slightly above the 5,810.68 that the S&P 500 was trading at midday Friday, but even with a 23.6% Fibonacci retracement of the index’s August low to its December high.
This 23.6% Fibonacci level (denoted by one of the thick blue horizontal lines at the chart’s left) makes the SPX’s 5,827 level all that much more important as a potential pivot.
Pivot points typically represent where support or resistance show up for a stock or index, depending on the price action’s direction. A pivot point can also act like an accelerant or slingshot if the stock or index breaks the pivot level.
Elsewhere in the above chart, readers will see that the S&P 500’s Relative Strength Index (the gray bar at the chart’s top) was neutral as of Wednesday's close.
However, the index’s daily Moving average Convergence Divergence indicator -- or “MACD,” denoted by the black and gold lines and blue bars at bottom -- had repositioned itself to appear more bearish.
The histogram of the index’s 9-day exponential moving average -- or “EMA,” marked with blue bars at the chart’s bottom -- was running below zero. That’s often reflective of a recent loss of upward momentum.
Meanwhile, the 12-day EMA (the black line at the chart’s bottom) moved below the 26-day EMA (the gold line). That’s a historically bearish move.
Additionally, the S&P 500 is undergoing what’s called a “swing traders' cross” or “mini death cross.” That’s a bearish “cross-under,” where a stock or index’s 21-day EMA (the green line in the chart above) moves below its 50-day Simple Moving Average (or “SMA,” marked with a blue line above).
Where Does the S&P 500’s Chart Show Support?
With Friday’s break below the above chart pattern's neckline, the S&P 500’s next key support level could be 5,605 -- the “half-way back point” or a 50% retracement of the index’s August-to-December run. (While common, 50% retracements are not true Fibonacci levels.)
(At the time of writing this column, Moomoo Technologies Inc. Markets Commentator Stephen “Sarge” Guilfoyle had no positions in S&P 500 ETFs or index funds.)
Indexes are unmanaged and cannot be directly invested into. Past performance is no indication of future results. Investing involves risk and the potential to lose principal.
This article discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve. Specific security charts used are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. Moomoo and its affiliates make no representation or warranty as to the article's adequacy, completeness, accuracy or timeliness for any particular purpose of the above content. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct. Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. In the U.S., investment products and services on Moomoo are offered by Moomoo Financial Inc., Member FINRA/SIPC.
TradingView is an independent third party not affiliated with Moomoo Financial Inc., Moomoo Technologies Inc., or its affiliates. Moomoo Financial Inc. and its affiliates do not endorse, represent or warrant the completeness and accuracy of the data and information available on the TradingView platform and are not responsible for any services provided by the third-party platform.
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