S&P 500: Death Cross or Trendline Breakout?
The S&P 500 has been in a steady downtrend all year. That makes it a good time to assess the state of the index before the big Fed announcement later today.
Bearish and bullish forces are battling each other on this chart. First you have the sharply falling trendline that began on January 4. This 2-1/2 month slide dragged the 50-day simple moving average (SMA) below the 200-day SMA today. Such a “death cross” is sometimes considered a bearish pattern, but it can also be a lagging indicator.
On the bullish side, we have recent attempts to build support around the June low of 4164. The index had a false breakdown below this level on February 24 (immediately after the Ukraine invasion began). Buyers then defended 4164 on March 8 and 14, both times producing inverted-hammer candlesticks. Will a breakout through the trendline follow?
It’s also noteworthy that the price zone is close to a 23.6 percent retracement of SPX's entire move from the lows of March 2020 through early 2022.
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This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
Bearish and bullish forces are battling each other on this chart. First you have the sharply falling trendline that began on January 4. This 2-1/2 month slide dragged the 50-day simple moving average (SMA) below the 200-day SMA today. Such a “death cross” is sometimes considered a bearish pattern, but it can also be a lagging indicator.
On the bullish side, we have recent attempts to build support around the June low of 4164. The index had a false breakdown below this level on February 24 (immediately after the Ukraine invasion began). Buyers then defended 4164 on March 8 and 14, both times producing inverted-hammer candlesticks. Will a breakout through the trendline follow?
It’s also noteworthy that the price zone is close to a 23.6 percent retracement of SPX's entire move from the lows of March 2020 through early 2022.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradingView is not affiliated with TradeStation Securities Inc. or its affiliates. TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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