S&P500 Price Analysis: Set to end the day flat, after retreating from daily highs at 4277
|- The S&P500 has fallen some 12.58% in the year.
- Improved market mood caused a jump off the lows, but it was short-lived, trading near the open of the session.
- S&P500 Technical Outlook: Downward bias but it could rally in the near term, followed by a subsequent dip.
Since the beginning of 2022, the S&P500 witnessed a fall of 14.52%, attributed to different factors. First, the Federal Reserve would begin its tightening cycle. Second, Russia's invasion of Ukraine generated a crisis in the commodities complex, with oil prices skyrocketing above $100 per barrel; wheat is printing record highs, while precious and base metals have reached gains as high as 250%, that in the case of nickel.
On Tuesday, the S&P500 sits at 4201, grinding lower some 0.01%, on improved market mood, spurred by an announcement of Ukraine not insisting on joining NATO, as reported by AFP.
S&P500 Price Forecast: Technical outlook
From a technical perspective point of view, the S&P is bearish biased. The daily moving averages (DMAs) residing above the price depict the abovementioned, the successive series of lower highs/lower lows, breaking previous support levels and paving the way for further losses.
During the day, the S&P500 jumped off June 18, 2021, lows around 4164.40, but faced strong resistance on October 4, 2021, support-turned-resistance at 4276.58.
With the Relative Strength Index (RSI) at 38.20 below the 50-midline signals, the downtrend persists, but then a positive divergence forming in the daily chart means that the index might print a leg-up before resuming its downtrend.
That said, the S&P500 would need a break above 4276.58. In that event, the next resistance would be the 4300 mark. Breach of the latter would expose a three-month-old downslope trendline and March 3 daily high at 4416.78.
If that scenario plays out, due to the nature of the market mood, the US central bank tightening, heightened levels of inflation, and technical factors will resume the downtrend towards fresh YTD lows.
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