Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

Free Trading Guides
Please try again

Live Webinar Events


Economic Calendar Events


Notify me about

Live Webinar Events
Economic Calendar Events






More View More
S&P 500 Technical Analysis: US Stocks Ready for the Next Big Drop?

S&P 500 Technical Analysis: US Stocks Ready for the Next Big Drop?

What's on this page


  • One-month trend line break hints S&P 500 downtrend may be resuming
  • Key support near 2600, foothold above 3000 needed to neutralize sellers
  • Trader sentiment studies warn bearish reversal signal may be brewing

The S&P 500 may be preparing to resume the downtrend launched in late February after the Fed’s spirited firefighting efforts amid the coronavirus outbreak triggered a broad-based recovery in risk appetite, pulling the index up from March lows. Prices have now broken rising trendline support defining the bounds of the upswing, suggesting a correction has run its course and the bearish trend has been re-engaged.

From here, a daily close below initial support at 2726.50 seems likely to open the door for a challenge of the 2603-26 price inflection zone. Extending down beyond that puts the 38.2% Fibonacci expansion in the spotlight. Initial resistance begins in the 2854-90 area. Neutralizing near-term selling pressure in earnest probably demands a daily close above the 3000 figure however.

S&P 500 price chart - daily

S&P 500 daily price chart created with TradingView


IG Client Sentiment (IGCS) studies offer a warning to would-be sellers however. The latest data shows that 77.42% of traders are net-short, with the long-to-short ratio at 3.43 to 1. IGCS is typically used as a contrarian indicator, so the net-short skew in traders’ exposure suggests that the S&P 500 is biased higher.

Having said that, traders are less net-short than yesterday and compared with last week. This warns that – despite the bullish tilt implied in overall positioning at surface level - the dominant S&P 500 price trend may be preparing to turn in favor of a downside scenario.

S&P 500 stock index price, trader sentiment

See the full IGCS sentiment report here.

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Ilya Spivak
Improve your trading with IG Client Sentiment Data
Get My Guide


--- Written by Ilya Spivak, Currency Strategist for

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.