LIVE MARKETS-S&P 500 index poised to bounce, but death cross looms

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S&P 500 INDEX POISED TO BOUNCE, BUT DEATH CROSS LOOMS

With e-mini S&P 500 futures EScv1 jumping around 1.5% in premarket trade on Monday, the S&P 500 index .SPX appears poised to make another attempt to clear some significant resistance hurdles:

The SPX ended Friday at 5,363.36, and with opening strength, the index will once again near resistance at its March 31 and March 13 intraday lows at 5,488.73 and 5,504.63, as well as the 76.4%-78.6% Fibonacci retracements of the April 2-April 7 down-leg at 5,492.29-5,511.21.

Last Wednesday, the SPX reached 5,481.34 before sliding back more than 6% into Thursday's intraday low and then rallying again into Friday's close.

Of note, with the CBOE market volatility index .VIX above 30.00, underscoring elevated uncertainty, sharp swings may call into question the validity of support and resistance levels.

Nevertheless, failure below the March lows and the maximum retracement hurdles can keep the bearish trend firmly intact. A reversal below Thursday's intraday low at 5,115.57 can potentially put the 4,835.04 April 7 low, as well as additional major support levels, at risk again.

Meanwhile, trend followers are taking note on a looming "death cross" on the S&P 500 given that the index's 50-day moving average (DMA) appears poised to cross below the 200-DMA.

The 50-DMA ended Friday at about 5,761, while the 200-DMA ended just over 5,754. The 50-DMA appears set to fall around 15 points on Monday, which would put it below the 200-DMA for the first time in 551 trading days (the SPX's 50-DMA last closed below its 200-DMA on February 1, 2023).

In any event, looking back over the last 50 years or so, the SPX has seen 24 of these death crosses. In 54% of the cases, the death cross was late, meaning that it occurred after the point of maximum intraday decline.

In 46% of the cases the SPX suffered greater losses (average and median additional decline from the point of the death cross into the ultimate intraday low was -19% and -12%).

Admittedly, additional maximum intraday losses in the wake of death crosses after the 1981, 2000 and 2007 tops were especially severe (-21%, -45% and -55%). However, by this measure, since around 1975, it has been roughly a coin flip as to whether the market was in store for greater pain beyond what had already been seen.

(Terence Gabriel)

FOR MONDAY'S EARLIER LIVE MARKETS POSTS:

DOLLAR WEAKNESS CATCHES SOME OFF GUARD - CLICK HERE

ARE WE OUT OF THE WOODS? - CLICK HERE

EUROPEAN SOFTWARE: A SECTOR IN LIMBO - CLICK HERE

BROAD GAINS LIFT THE STOXX - CLICK HERE

BEFORE THE BELL: TECH CHARGES UP, LVMH KICKS OFF EARNINGS - CLICK HERE

DOING THE TARIFF TWO-STEP - CLICK HERE