S&P 500 (INDEX: SPX ): The S&P 500 Index has closed below the 50-DMA for the 4th time this year. Will this be an early signal for a bearish trend?
The Technical Insights: Prior to the Friday close below the 50-DMA, the index has dipped below for several occasions beginning on 29th January, followed by the 4th March dip and the 18th June close. But it all quickly rotated to the upside the following trading day, which affirmed a bullish bias of the index to date.
Based on the historical price action on this year alone, the latest dip could be the same. Looking closely, as depicted on the chart such rotation from the dip occurred at a critical support level . If the dip proved to be stronger than before, it could revisit the near price confluence area of 4300.
Such dip towards the critical support level and the 4,300 may be a potential move of the index, depending on the statement tone made after the FOMC meeting this week starting 21st Sept. Investors will be waiting for the FOMC statement as it could hold some clues on both the tapering action and the possible interest rate hike.
Overall, the current uptrend of the index remain as uptrend under pressure. Be cautious on adding additional buying and be defensive on your portfolio.