S&P 500 Faces Key Support Level: Bullish Run Ahead?

• The S&P 500 is down 2.06%, reaching 5,346.55, amid recent jobs data and tech stock sell-off.
• The Nasdaq 100 falls over 10% from its peak, meeting the correction threshold due to tech stocks’ decline.
• Traders project substantial Fed rate cuts in 2024 amid a continued rally in Treasuries.

Benjamin Cowen, founder ITC Crypto, recently highlighted the S&P 500’s return to its bull market support band on X platform. The S&P 500 index has shown notable fluctuations over the past three years. It covers weekly data from early 2022 to late 2024, revealing critical trends and patterns.

The S&P 500 is at $5,346.55 at press time, reflecting a 2.06% drop. The index had a downturn in early to mid-2022, hitting its lowest around October 2022. However, from late 2022 onwards, the index displayed a robust upward trend, peaking in mid-2024. Recent performance indicates a sharp rise followed by a pullback.

Besides, in Cowen’s analysis, technical indicators show two moving averages, likely the 50-day and the 200-day, in a bullish configuration since late 2022. These averages have acted as support during the uptrend, with corrections often finding support at these levels. Despite periods of volatility, the overall trend since late 2022 has been relatively smooth and upward.

However, recent economic data has influenced market behavior. The S&P 500 witnessed its worst reaction to jobs data in almost two years as per Bloomberg reports. Key technology companies’ decline pushed the Nasdaq 100 down over 10% from its peak, meeting the correction threshold. Additionally, a rally in Treasuries extended for a seventh straight day, with traders predicting the Fed will cut rates by more than a full percentage point in 2024.

The equities rout follows an advance driven by bets on a “soft economic landing.” The Federal Reserve has managed to bring down inflation. However, the latest jobs figures suggest the policies may be cooling the labor market excessively. This situation has raised concerns about the overall economic outlook.

Moreover market cycles are evident in the chart, illustrating a complete cycle from the bearish period in 2022 to the bullish run in 2023-2024. The recent correction might be a standard market adjustment or signal a new trend. Hence, investors are closely monitoring these developments to gauge future market movements.