Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

S&P 500: Bear Market Rally Or Return To Growth?

By FxPro Financial Services Ltd (Alexander Kuptsikevich)Stock MarketsAug 05, 2022 06:01AM ET
www.investing.com/analysis/sp-500-bear-market-rally-or-return-to-growth-200628113
S&P 500: Bear Market Rally Or Return To Growth?
By FxPro Financial Services Ltd (Alexander Kuptsikevich)   |  Aug 05, 2022 06:01AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The S&P 500 is at 4150, having returned to the rebound highs of late May. The direction of the breakout outside the 4100-4200 range will determine its future for the next days or weeks.

The S&P500 is at 4150, having returned to the rebound highs of late May
The S&P500 is at 4150, having returned to the rebound highs of late May

In mid-June, the S&P 500 halted its correction from all-time highs. After losing around 25% in just over six months and returning to the lows since December 2020, the stocks have turned up, despite the background rather than thanks to it. In the last month and a half, the financial world has seen two 75-point Fed rate hikes, a shocking housing market downturn, and cooling of consumer demand. That said, the index has continued to crawl upwards, even if this recovery cannot be called flat.

Technically, the S&P 500 made a classic Fibonacci correction of the rally from March 2020 to all-time highs in early 2022, getting support on the 61.8% retracement area. Late last month, a significant signal to break the downtrend was the consolidation above the 50-day moving average, which later turned from resistance into support.

However, locally, it is too early for the bulls to celebrate the return of the bull market. The RSI index on the daily charts is approaching the overbought area, raising the question of a legitimate pullback after a month and a half rally. Separately, the S&P 500 index is approaching the circular 4200 level, almost coinciding with the 76.4% retracement of the global rally.

S&P 500 weekly chart.
S&P 500 weekly chart.

The above disposition shows that gravitational pressure is building up in the equity market, and the downside momentum risks are rising markedly in the near term.

From a longer-term perspective, however, a consolidation above the 4200 levels would mark the start of a new, more solid phase of the equity market recovery. The further upside would no longer be called a "bear market rally." It would be more of a "return to the upside after a six-month correction".

And if the immediate correction takes the S&P 500 under 4100 - below the previous local lows - it would indicate that the bearish momentum is taking hold, and we might see a new decline. In that case, investors should be prepared that the markets will not only return to the lows of June but also rewrite them, taking the index towards 3000.

S&P 500: Bear Market Rally Or Return To Growth?
 

Related Articles

S&P 500: Bear Market Rally Or Return To Growth?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
Zman Trading
ZmanTrading Aug 06, 2022 1:35AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Breaking up above 4200 seems less likely after yesterdays much higher than expected non farmers payroll numbers. Adding this bear m rally’s duration of approx 50 days also makes a continuation more unlikely and opens up for a trend reversal possibly next week.
Stephen Fa
Stephen Fa Aug 05, 2022 1:51PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Inflation of earnings, that's all
Dr Enamul Hoque
Dr Enamul Hoque Aug 05, 2022 9:53AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
In such all negativity scenario possibility of going upside is remote
John Avenetti
John Avenetti Aug 05, 2022 9:44AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
absolutely positively going to be lows. this is all bs.
Glenn Ebersole
Glenn Ebersole Aug 05, 2022 7:11AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
in a another words if it goes lower it will go lower and if it goes higher it will go higher.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email