S&P 500 Weekly Technical Analysis

The S&P 500 has tried to rally initially during the course of the trading week but then gave back gains just below the 50 Week EMA. By doing so, the market ended up forming an inverted hammer, and therefore if we break down below the bottom of the candlestick, then it is likely that we test the 4000 level. The 4000 level is a large, round, psychologically significant figure that people need to pay close attention to, and if we break down below there it is likely we go much lower.

Ultimately, the S&P 500 looks like it is ready to go lower, but we need to break through all of that support to make it happen. You could even go so far as to suggest that there is some type of pseudo-head and shoulders pattern, but at the end of the day what matters is that there is a lot of bearish pressure and fear.

If we were to turn around a break above the top of the inverted hammer for the week, then it is likely that the market could go to the 4500 level. The 4500 level is an area where we have seen selling pressure previously, and that could be a bit of a target. All things being equal, this is a market that I think continues to be very noisy, and therefore worried about interest rate hikes and economic slowdown issues.

As we continue to see potential stagflation, it is not a good environment for stocks and therefore I think you need to look at rallies as potential selling opportunities on shorter-term charts and recognize that a break down below the lows of this week could kick off a longer-term selling opportunity.

S&P 500 Forecast Video 09.05.22

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