LIVE MARKETS-S&P 500 index and the resilience of its 50-DMA

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S&P 500 INDEX AND THE RESILIENCE OF ITS 50-DMA

On the last two Fridays, the S&P 500 index .SPX found itself testing its rising 50-day moving average (DMA). On both days, after an intraday violation, the benchmark index was able to recover and end back above this closely followed intermediate-term moving average.

The SPX ended Friday at 6,734.11, and the 50-DMA should now be around 6,707 on Monday. It has now been 138 straight trading days since the index last finished below it, which is its longest such streak since a 149-trading-day run from July 2006 to February 2007.

Bulls can see this as a sign of the market's strength and resilience, while bears are no doubt seeing it as indicative of a stretched advance.

The S&P 500 ended Friday down 2.28% from its 6,890.89 October 28 record close, and down 2.69% from its 6,920.34 October 29 record intraday high. A weekly Gann Line, which capped strength in December 2024 ahead of the early 2025 collapse, which now resides around 6,910, is also a hurdle in this area. Gann Lines are drawn at specific angles from important highs and lows in an attempt to identify future support and resistance, as well as market turning points.

Meanwhile, on Monday, e-mini S&P 500 futures EScv1 are slipping around 0.2%, or 13 points or so, as markets await Nvidia NVDA.O earnings on Wednesday and government economic data releases.

Thus, an SPX break to new highs, or a close below the 50-DMA, may spark additional momentum in the direction of the move.

On a thrust to new highs, the SPX will then face the 7,000 psychological barrier. Eleven times the 2009 low is 7,334.69.

Ten times the 2009 low is 6,667.90, and since reaching this level in mid-September, it has proven to be sticky and difficult to pull away from. The November 14 trough was at 6,646.87 and the November 7 low was at 6,631.34. The October 10 low was at 6,550.78.

A fall to the rising 100-DMA, which should be around 6,530 on Monday, would put the SPX down as much as 5.6% from its record intraday high.

(Terence Gabriel)

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