S&P 500 Technical Outlook: Stock Plunge Not Over Yet

2022-04-06 15:30:00 Michael Boutros

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S&P 500, Nasdaq Technical Price Outlook: Near-term Trade Levels
S&P 500 Price Chart – SPX500 Daily
S&P 500 Price Chart – SPX500 240min
S&P 500 Trader Sentiment – US500 Price Chart
US Economic Calendar
Active Technical Setups

S&P 500, Nasdaq Technical Price Outlook: Near-term Trade Levels

S&P 500 technical trade level update – Daily & Intraday Charts
SPX500 reversal off uptrend resistance now targeting uptrend support- risk for inflection there
SPX Resistance 4560s, 4595 (key) - Support 4466, 4416/35 (critical)

The S&P 500 marked an outside-day reversal yesterday with the technicals suggesting more pain for stocks. These are the targets and invalidation levels that matter on the SPX500 technical price charts this week. Review my latest Strategy Webinar for an in-depth breakdown of this SPX500 setup and more.

S&P 500 Price Chart – SPX500 Daily

Chart Prepared by Michael Boutros, Technical Strategist; SPX500 on Tradingview

Technical Outlook: In last month’s S&P 500 technical outlook we noted that the SPX recovery was approaching resistance at 4417 and that, “A breach / daily close above this threshold would be needed to suggest a more significant low was registered last week with such a scenario exposing subsequent resistance objectives at 4485 and a more significant technical confluence at 4546/74- look for a larger reaction there IF reached.” A topside breach into the close of March fueled a breakout with SPX registering an intraday high at 4639 before pulling back – the index marked an outside-day reversal yesterday ahead of the median-line, further highlighting the threat for further losses in the days ahead.

S&P 500 Price Chart – SPX500 240min

Chart Prepared by Michael Boutros, Technical Strategist; SPX500 on Tradingview

Notes: A closer look at SPX500 price action shows a clean pivot along this up-slope with the decline taking the shape of a near-term descending channel. A break lower from here exposes the 100% extension of the decline off the March highs at 4466 and key support at the January low-day close / 38.2% Fibonacci retracement of late-February advance at 4416/35- area of interest for a possible exhaustion low IF reached. Keep in mind losses below this threshold would be extremely damaging from a technical standpoint, with such a scenario exposing the 61.8% retracement / January close-low at 4309/16. Initial resistance now back at the highlighted trendline confluence (near ~4560s) with a breach / daily close above yesterday’s high (4595) needed to mark resumption of the broader uptrend.

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Bottom line: The S&P 500 remains at risk for further losses near-term and we’re on the lookout for a possible low in the days ahead closer to trend support. From at trading standpoint, look to reduce short-positioning / lower protective stops on a stretch towards 4416/35- look for a larger reaction there IF reached for guidance. Review my latest S&P 500 Weekly Technical Forecast for a closer look at the longer-term SPX 500 technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

S&P 500 Trader Sentiment – US500 Price Chart

A summary of IG Client Sentiment shows traders are net-short the S&P 500- the ratio stands at -1.13 (47.04% of traders are long) – typically a neutralreading
Long positions are1.01% higher than yesterday and 13.13% higher from last week
Short positions are 2.03% lower than yesterday and 8.96% lower from last week
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests US 500 prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current US 500 price trend may soon reverse lower despite the fact traders remain net-short.