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S&P 500 Forecast: Stocks Plunge, SPX Technical Support at July Lows

S&P 500 Forecast: Stocks Plunge, SPX Technical Support at July Lows

Michael Boutros, Strategist

S&P 500 Technical Price Outlook: Short-term Trade Levels

  • S&P 500 technical trade level update – Daily & Intraday Charts
  • SPX500 sets July opening-range above key support pivot – breakout to offer guidance
  • SPX Resistance 3829, 3916, 4089-4105 (critical) - Support 3734/56, 3664, 3482-3501(key)
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The S&P 500 plunged more than 4.7% off the monthly high with the a four-day decline taking the index into a key pivot zone at the July range lows. We’re looking for possible price inflection into this technical threshold over the next few days with a break lower threatening resumption of the broader yearly downtrend. These are the targets and invalidation levels that matter on the SPX500 technical price charts into the close of the week. Review my latest Strategy Webinar for an in-depth breakdown of this SPX500 setup and more.

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S&P 500 Price Chart – SPX500 Daily

S&P 500 Price Chart - SPX500 Daily - SPX Short-term Trade Outlook - Stock Technical Forecast - ES

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

Technical Outlook: The S&P 500 has set the July opening-range just above a technical pivot zone at the 2021 yearly open / 61.8% Fibonacci retracement of the June advance at 3734/78. A four-day decline is now probing this key zone again today- the focus is on possible inflection off this threshold with a break / close below the 2021 January low 3664 needed to mark resumption of the broader downtrend. Broader bearish invalidation now lowered to the 38.2% retracement of the yearly range / February low at 4089-4105.

S&P 500 Price Chart – SPX500 240min

S&P 500 Price Chart - SPX500 240min - SPX Short-term Trade Outlook - Stock Technical Outlook - ES

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

Notes: A closer look at SPX500 price action shows the index breaking below the short-term ascending pitchfork formation we’ve been tracking off the June low with the decline now testing the July range lows. A break lower from here keeps the focus on 3664 with subsequent support objectives eyed at 3609 and the 50% retracement of the 2020 advance / 1.618% extension of the yearly decline at 3482-3501- look for a larger reaction in price there IF reached. Initial resistance now back at 3829 backed by 23.6% retracement / monthly range highs at 3916/18 and 4048- both levels of interest for possible topside exhaustion IF reached.

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Bottom line: The S&P 500 has broken below short-term uptrend support and threatens resumption of the broader downtrend with a close below 3734. From at trading standpoint, rallies / recoveries should be capped by 3829 IF this break is legitimate with a break lower from here threatening another accelerated decline towards 3500s. That said, the immediate focus is on a clear break of the objective monthly opening-range for guidance. Review my last 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

S&P 500 Trader Sentiment - US500 Price Chart - SPX500 Retail Positioning - SPX Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long the S&P 500- the ratio stands at +1.53 (60.54% of traders are long) – typically a bearishreading
  • Long positions are10.24% higher than yesterday and 1.71% lower from last week
  • Short positions are 4.88% lower than yesterday and 6.09% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests SPX500 prices may continue to fall. Traders are more net-long than yesterday but less net-long from last week. The combination of current positioning and recent changes gives us a further mixed S&P 500 trading bias from a sentiment standpoint.
How to Use IG Client Sentiment in Your Trading
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-Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

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

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