(Part 3 of 5) S&P500 technical analysis
3 · S&P 500 — technical read (daily chart)
For the daily chart, we first look at MACD, which shows changes in market momentum. We then check the 50-day and 200-day moving averages and the flow of trading money to see whether buyers or sellers have more control. Together, these indicators suggest one way to approach the week; they do not predict what will happen.
S&P 500 (^GSPC), daily — Yahoo Finance; close 16 Oct 7,659.44 (−1.09%).
Market signal summary — short-term downtrend, long-term uptrend: The S&P 500 closed at 7,659.44 on 16 October, down 1.09% for the day and about 2% for the week. The index fell below its 50-day moving average near 7,700, while MACD crossed below its signal line, both pointing to weakening short-term momentum. However, the index remained about 5% above its 200-day moving average near 7,271, and the 50-day average was still above the 200-day average. Money flow was only slightly positive and selling was concentrated in AI and chip shares. The overall picture is a short-term downtrend within a longer-term uptrend.
Our view: NEUTRAL, but leaning negative. The index has fallen below its 50-day average, and MACD has dropped below its signal line. Both point to possible weakness in the short term. However, the longer-term rise above the 200-day average remains intact. A close back above the 50-day average would be encouraging. A fall toward about 7,300 would test the longer-term trend. Last week, the S&P 500 fell about 2% and the Nasdaq about 4.5%.
Weakness is also spreading beyond the largest companies. Smaller-company shares are testing an important support level. The Russell 2000 ETF (IWM) has fallen back to its 200-day average, which acted as a floor during the recent rise.
iShares Russell 2000 ETF (IWM), daily — testing its 200-day line. Barchart, 14 Oct.
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