S&P 500 (SPX) Continues Strong Rally, Breaks Fib Projection Level

Since its brief low in April, the S&P 500 (SPX) has rallied by nearly 20%, clearly marking a strong uptrend. This momentum enabled the index to break through the Fibonacci projection level at 5,639. This move confirms the ongoing bullish strength in the market, as SPX reaches new highs.

S&P 500 (SPX) Surges Past Key Fibonacci Resistance, Extending Bullish Rally

However, the RSI has now entered overbought territory, signaling a potential short-term overextension. Additionally, the MACD histogram has begun ticking bearishly lower, hinting at a potential slowdown in bullish momentum. Despite this, the MACD lines remain bullishly crossed, suggesting the longer-term uptrend is still intact.

Further support for the bullish outlook comes from the EMAs, where a golden crossover continues to confirm the broader upward trajectory. The trend is likely to remain positive in the mid-to-long term unless more significant bearish signals emerge.

S&P 500 (SPX) at Risk of Correction: MACD Histogram Is Losing Bullish Strength

While the S&P 500 (SPX) has continued its upward momentum, the start of the week has shown bearish signals. The technical indicators are beginning to flash warning signs of a potential correction on the horizon.

Technical Indicators and Trends (Weekly Chart):

• MACD (Moving Average Convergence Divergence): The MACD lines remain bullishly crossed, but the histogram has started ticking lower, indicating weakening bullish momentum.
• RSI (Relative Strength Index): The RSI is approaching overbought regions and is forming a strong bearish divergence, which could indicate a potential pullback.
• EMAs (Exponential Moving Averages): The EMAs remain bullishly crossed, signaling that the mid-term trend is still positive. However, the immediate bearish signals from the MACD and RSI warrant caution.

If a correction occurs, key support levels can be found at 5,590 and 5,400, aligned with Fibonacci retracement zones. If these supports are breached, the next critical levels lie at 5,200 and 4,750. The 50-week EMA, currently around 5,260, also offers another layer of potential support.

S&P 500 (SPX) Daily Chart Gives Mixed Signals

The daily chart for the S&P 500 presents mixed signals. If the index undergoes an immediate correction, it could find support at the 50-day EMA, currently at 5,672.

Technical Indicators and Trends (Daily Chart):

• MACD (Moving Average Convergence Divergence): The MACD lines remain bullishly crossed, though the histogram has fluctuated between bullish and bearish ticks, indicating a lack of clear direction.
• RSI (Relative Strength Index): The RSI is in neutral territory, suggesting that the market is not leaning strongly in either direction, leaving room for potential price shifts.
• EMA (Exponential Moving Average): The golden crossover of the EMAs continues to reflect a bullish trend in the short-to-medium term, maintaining the broader positive outlook despite recent fluctuations.

More Weakening Bullish Momentum In The 4H Chart

In the 4-hour chart, the indicators are turning bearish, raising the possibility of a short-term decline.

Technical Indicators and Trends (4H Chart):

• MACD (Moving Average Convergence Divergence): The MACD lines are bearishly crossed, and the histogram is ticking lower, suggesting the bullish momentum is weakening.
• RSI (Relative Strength Index): The RSI is just below overbought levels and shows a bearish divergence, signaling potential downside pressure.
• EMAs (Exponential Moving Average): Despite the near-term bearish indicators, the golden crossover of the EMAs supports the overall bullish trend, suggesting that the broader market outlook remains positive as long as key support levels hold.