LIVE MARKETS-S&P 500 has another flirtation with its 50-DMA

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S&P 500 HAS ANOTHER FLIRTATION WITH ITS 50-DMA

The S&P 500 .SPX fell Tuesday for a third straight day. Of note, however, after flirting with its rising 50-day moving average (DMA), the benchmark index was able to rebound and end well off its intraday low.

On Tuesday, the SPX tested this closely followed intermediate-term moving average at 6,765, hitting an early-afternoon low of 6,759.74 before then regrouping to finish at 6,800.26. With this, the S&P 500 ended down 1.46% from its 6,901 December 11 record closing high and down 1.74% from its 6,920.34 October 29 record intraday high.

Now on Wednesday, E-mini S&P 500 futures EScv1 are higher by about 0.3% in premarket trade, suggesting the SPX is poised for a higher open. That said, markets may be in a holding pattern in the very short term given November CPI data due Thursday morning.

In any event, on a push to new highs, the S&P 500 will face a weekly Gann Line, which now resides around 6,965, as well as the 7,000 psychological level.

This Gann Line capped strength in late 2024 and early 2025, ahead of the SPX's near-20% collapse on a closing basis into its April trough. More recently, in late October and early November, the SPX was able to probe slightly above this barrier. However, the index failed to score a weekly close above it, before promptly dropping a little over 5% into its November 20 closing low.

An SPX close below the 50-DMA may lead to another test of the rising 100-DMA, which should be around 6,635 on Wednesday. The November 21 intraday trough was at 6,521.02.

Meanwhile, the S&P 500 is now up 15.6% year-to-date. With this, it's on pace to rise for a third straight year. However, with its current 0.71% decline for December, it's also on pace to end a seven-month winning streak.

The S&P 500 last posted a seven-month winning streak in August 2021. The index last rose more than seven months in a row with a 10-month stretch of gains that ended in January 2018.

(Terence Gabriel)

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