S&P 500 Gives Up Week's Early Gains

Weekly Technical Analysis of the S&P 500

Initially, the S&P 500 attempted a rally during the trading week, but eventually gave back gains slightly below the 50 Week Exponential Moving Average. As a result, the market formed an inverted hammer, and if we break below the bottom of the candlestick, it is possible that we will test the 4000 level. The 4000 level is a large, round, psychologically significant number that people must pay particular attention to; if we break below that level, it is likely that we will go much lower.

Ultimately, the S&P 500 appears prepared to decline, but we must first break through all of that support for this to occur. You could go so far as to claim that there is a pseudo-head-and-shoulders pattern, but what ultimately matters is that there is a great deal of bearish pressure and dread.

If the market were to reverse a weekly break above the top of the inverted hammer, it is possible that it could reach $4,500. The 4500 level is an area where we have previously observed selling pressure, so it might be a target. Taking all factors into account, I believe this market continues to be extremely volatile and hence concerned about interest rate increases and economic downturn concerns.

As possible stagflation persists, it is not a favorable environment for equities, so I believe you should view rallies as potential selling chances on shorter-term charts and understand that a break below this week's lows might initiate a longer-term selling opportunity.