SPX's rally is losing steam after finding nearly perfect harmony

S&P 500 Index has been trending down since its high near $4,448 on 16th June 2023. During this period, the index retraced toward the 20-day SMA, and several technical indicators started to flash warning signs on the daily time frame; for example, RSI broke below 70 points, MACD and Stochastic began to reverse to the downside, and DM+ with DM- slightly converged. Interestingly, these developments followed nearly the perfect harmony between the decline (from January 2022 high to October 2022 low) and rise (from October 2022 low to June 2023 high) of SPX. Even though the recent decrease in the value of SPX has not been very significant, multiple developments put us on high alert. We will pay close attention to the price’s ability to break below support at $4,325 and 20-day SMA; if it succeeds, it will raise the odds of a short-term/medium-term trend reversal. Contrarily, if SPX bounces off the support area, it will be bullish.

Illustration 1.01
Illustration 1.01 portrays the perfect harmony between the decline and rise of SPX through two distinct periods.

Illustration 1.02
Illustration 1.02 shows the daily chart of SPX. The yellow arrow hints at SPX approaching an important support level and 20-day SMA. We would like to note that there is an absence of any other significant support below these levels until $4,200.


Technical analysis gauge
Daily time frame = Slightly bearish
Weekly time frame = Neutral/Sligthly bearish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

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DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.