The S&P 500 has been having a tough time gaining traction. Since mid-May, the benchmark index has largely moved sideways even though it briefly edged up to a record high on June 2, and its outlook is relatively uncertain, especially given resurgent tensions in the Middle East.
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Last Friday and again on Monday, the index delivered a warning sign for chart watchers: two straight closes below its 50-day moving average, only the second and third such breaches since early April.
Technical analysts use moving averages to smooth out short-term noise and highlight a market's underlying trend, and the 50-day line is one of the more closely watched.
The index also ended last Friday below a rising weekly Gann line it had been hugging for months. Gann lines, a tool that combines price with time, are drawn from significant highs and lows to flag levels where buying or selling pressure — and potential turning points — may emerge.
In a constructive sign, with its 7,509.20 close on Tuesday, the S&P 500 climbed back above both the moving average, which is now around 7,470, according to data supplied by LSEG, and the weekly Gann line, which is now around 7,485. With this, the index ended down just 1.32% from its 7,609.78 June 2 record close and down 1.47% from its 7,620.90 June 2 record intraday peak.
Bulls need a close above the July 10 peak of 7,579.83 to reopen the path to record territory, with 8,000 becoming the next big magnet if fresh highs are confirmed.
On the downside, a break below the July 8 low of 7,421.82 would point to renewed selling, with support next near 7,294.18 and 7,237.85, then the rising 100-day moving average around 7,161. A deeper slide could put the psychologically important 7,000 level — and the rising 200-day average — back in focus. Middle East tensions remain the wild card that could tip the balance either way.
What the chart shows:
(Daily markets commentary from Reuters analysts on the signals financial charts are sending - and what they might mean.)
