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News

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News

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Asset Watch

Where could the bulls save the S&P 500?

Tuesday, September 26, 2023

Bearish seasonality collided with a rapid rise in interest rates and sent the S&P 500 tumbling on Sep. 21. The weakness continued Sep. 22, and battered bulls have struggled to regain control of the index. However, with the seasonal weakness concluding in early October, technical reinforcements could mitigate the drawdown from here.
The S&P 500 has cut through its 50 and 100-day moving averages, and the latter became resistance on Sep. 21. While the weekly chart showcases support near 4,280, as the level is close to the July and October 2021 lows and the January 2022 lows (labelled initial support); 4,280 was the closing high during the August 2022 rally, which preceded the index’s bear market low.
Not far behind, trendline support is in the 4,230 range. The upward-sloping grey line drawn from the October 2022 lows provides a backup if 4,280 doesn’t hold.

After that, the S&P 500’s 50-week moving average stands near 4,143. The level ended the August 2022 and November/December 2022 rallies and should act as support unless an economic calamity unfolds.

 

Finally, the S&P 500 often experiences a sharp jump in early/mid-October and erases all its September declines by early November. Therefore, if some good news hits the wire, short covering could help ignite an upswing that shifts sentiment in the bulls’ favour.

 

So, will all these levels hold or have the bears finally regained their mojo?


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