Market turbulence over the past two weeks has left U.S. stock investors scrambling for direction ahead of the typically strong seasonal period. While the reasons behind last week's wild swings are complex, some bullish narratives are being reassessed. The AI theme has cooled, certainty about a Fed rate hike next month has wavered, and economic data points to slowing growth. Speculative bets—from Bitcoin to unprofitable tech stocks—have unwound rapidly. After the dust settled, the S&P 500 fell nearly 2% to 6,602.99. However, the index tested critical technical support levels during the sell-off, prompting analysts to scrutinize charts for stabilization signals.
Todd Sohn, Senior ETF and Technical Strategist at Strategas, noted: "Boundary lines for the coming weeks and months are being drawn. A decisive breakout—up or down—will signal a major shift. Some of these levels are becoming key reference points."
**S&P 500 Breaches Support** Last Thursday, the S&P 500 fell below its 100-day moving average for the first time since February. Although Friday’s rebound pushed it back above this level, the index failed to reclaim the flattening 50-day moving average—an ominous sign.
Joe Gilbert, Portfolio Manager at Integrity Asset Management, said: "We’ve started trimming positions. If the S&P 500 breaks below the next support level, we’ll adopt a more defensive stance."
Several strategists are watching the 6,550 level—the index’s October low. Thursday’s sell-off briefly breached this mark before Friday’s recovery. John Kolovos, Chief Technical Strategist at Macro Risk Advisors, warned that a "clean break" below 6,550 could trigger a slide toward 6,400, then 6,200, fully exhausting the downward pressure that began in late October. He added that sustained trading below 6,550 would be "a concerning development," potentially impacting market performance "not just for the rest of the year but into 2025."
Will Tamplin, Senior Analyst at Fairlead Strategies, views 6,533 as a "natural spot for an oversold bounce" that may temporarily halt the pullback. The S&P 500 is down 3.5% this month, on track for its worst November since 2008. Yet, technical indicators remain far from oversold levels typically signaling a rebound.
Wells Fargo data shows about 39% of S&P 500 stocks traded above their 50-day moving average on Friday—above the 15%-20% threshold that often signals capitulation. Still, volatility may not persist. Barclays’ models indicate Thursday’s extreme swings triggered an overnight buy signal. Alexander Altmann, Global Head of Equity Tactical Strategy at Barclays, noted that the bank’s timing indicator dipped below -7 for the first time since August 4—a level that historically preceded short-term S&P 500 rallies.
A worrying sign for bulls is the elevated Cboe Volatility Index (VIX), which spiked to 28.27 on Thursday before retreating below 24. However, it remains above its long-term average of 19, suggesting turbulence may continue.
Ari Wald, Head of Technical Analysis at Oppenheimer & Co., argued that the S&P 500 must drop to 6,430—near the 23.6% Fibonacci retracement of its rally from April lows—to stabilize. "If selling persists, 6,430 could mark a bottom," he said.
Other analysts are eyeing correlated assets for clues. JC O’Hara, Chief Technical Strategist at Roth Capital Partners, noted: "Bitcoin’s recent moves have led the S&P 500. Until crypto stabilizes, equities may struggle to find footing—I see $75,000 as critical support." Bitcoin briefly fell to $80,553.57 on Friday.
Kolovos of Macro Risk Advisors cautioned that despite Friday’s rebound, "internal market damage" persists, with the index hovering near "one of the most significant support levels since the April low."
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