LIVE MARKETS-S&P 500 index: Downside still beckons

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S&P 500 INDEX: DOWNSIDE STILL BECKONS

The S&P 500 index .SPX ended Friday at 5,770.20, putting it down 6.09% from its February 19 record closing high. However, with e-mini S&P 500 futures EScv1 suggesting a loss of about 80 points, or more than 1.3%, at Monday's open, the benchmark index appears poised for further downside pressure.

With this, the index looks like it will make another attempt to take out its rising 200-day moving average (DMA), which should be around 5,735:

Since reclaiming this closely followed long-term moving average on November 2, 2023, the SPX has not registered a daily close back below.

Therefore, bulls will be watching to see if the index can hold support in the 5,666.29-5,633.35 area and mount another recovery. This zone includes Friday's intraday low (5,666.29), the 23.6% Fibonacci retracement of the October 2023-February 2025 advance (5,665.13), the late-August high (5,651.62), the rising 233-day moving average, a Fibonacci-based long-term moving average (around 5,650 on Monday), and the 50% retracement of the August 2024-Febraury 2025 advance (5,633.35).

At the 50% retracement level, the SPX would be down 8.3% from its record closing high.

In the event of a deeper drop, the 61.8% retracement of the August-February advance is at 5,512.02. A decline to this level would put the S&P 500 down 10.3% from its record closing high.

Of note, in the July 2023-October 2023 selloff, which has been the most severe SPX decline since the 2022 bear market concluded, the index fell as much as 10.1% on a closing basis.

On a reversal back above the 200-DMA, initial resistance will be in the 5,773-5,783 area.

(Terence Gabriel)

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