S&P 500 stalls around 4700, amid risk-off market sentiment

The S&P 500 retreats from Tuesday’s highs, down some 0.33%, currently at 4,684.81 during the New York session at the time of writing. The market mood is in risk-off mode, portrayed by falling US major equity indices. The Dow Jones Industrial Average (DJIA) also falls 0.50%, at 35,965.49, while the Nasdaq Composite rises 0.19%, up to 16,338.50.

On Wednesday, the US economic docket featured housing data, which came mixed. Building Permits for October rose to 1.65M, higher than the 1.638M expected by analysts. Contrarily, Housing Starts for the same period slowed their pace to 1.52M, lower than the 1.576M foreseen.

Once the data was released, it seemed that traders took some risk off the table as construction slowed down, implying that high material prices and labor shortages are to be blamed. Meanwhile, the tech-heavy Nasdaq rise is led by a rally in Apple and Tesla.

Sector-wise, consumer discretionary, and health advance 0.63%, and 0.26%, respectively. On the other hand, the main losers are energy, financials, and industrials, losing 1.42%, 1.26%, and 0.88% each.

In the bond market, the US 10-year benchmark note falls one basis point, sits at 1.616%, undermining the US Dollar Index, which falls 0.12% in the day, at 95.80.

S&P 500 Price Forecast: Technical outlook

The daily chart depicts the S&P 500 has an upward bias, confirmed by the daily moving averages (DMA’s) well located below the index value, with an upward slope. Nevertheless, the Relative Strength Index (RSI) is at 70, well within overbought conditions, suggesting that a lower correction could happen. 

In the case of a correction, the first support would be the October 26 high at 4,598.53 that confluences with the 78.6% Fibonacci retracement as the first support level. In the outcome of a further correction, the October 27 low at 4,553.53 would be the next demand zone.