Did Key Support Just Hold on the S&P 500?
An important level has emerged on the S&P 500 in the second half of 2022. Yesterday it held as support, which may be an important signal for traders into yearend.
The index has chopped on either side of approximately 3910 since early July. Initially resistance, the price area served as a springboard for August’s sharp rally. It then briefly provided support in early September and marked a top after the Federal Reserve’s hawkish meeting two weeks later. 3910 would subsequently hold the index in check at the start of this month.
All of those pivots suggest its relevance as a level. That could increase the importance of Thursday’s price action, when SPX inched 4.5 points below 3910 before clawing back to the upside. Has key support held before the holidays?
Looking above, traders may eye roughly 4120. It was the peak on September 12, shortly before a high inflation reading sent the index to new lows.
Next you have a fast and a slow moving average. The 8-day exponential moving average was near the low yesterday and today. That could indicate the short-term trend remains positive.
Second, the 100-day simple moving average (SMA). Not only did SPX bounce at this SMA. The line is also rising for the first time since February, which could suggest the longer-term trend is getting less bearish. (This chart has our MA speed custom script.)
There are also some potential positives not immediately visible on the SPX chart. As cited earlier, the U.S. dollar and Treasury yields have shown signs of topping. (Crude oil is also sneaking lower, a potential deflationary stocking stuffer for the holidays.) The countertrend VIX has been unable to bounce.
One last factoid emerged from the American Association of Individual Investors (AAII). Its latest weekly poll showed that 33.5 percent of respondents were “bullish” toward the broader market -- its highest reading of 2022. Are spirits finally starting to lift after nearly a year of deep pessimism?
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
The index has chopped on either side of approximately 3910 since early July. Initially resistance, the price area served as a springboard for August’s sharp rally. It then briefly provided support in early September and marked a top after the Federal Reserve’s hawkish meeting two weeks later. 3910 would subsequently hold the index in check at the start of this month.
All of those pivots suggest its relevance as a level. That could increase the importance of Thursday’s price action, when SPX inched 4.5 points below 3910 before clawing back to the upside. Has key support held before the holidays?
Looking above, traders may eye roughly 4120. It was the peak on September 12, shortly before a high inflation reading sent the index to new lows.
Next you have a fast and a slow moving average. The 8-day exponential moving average was near the low yesterday and today. That could indicate the short-term trend remains positive.
Second, the 100-day simple moving average (SMA). Not only did SPX bounce at this SMA. The line is also rising for the first time since February, which could suggest the longer-term trend is getting less bearish. (This chart has our MA speed custom script.)
There are also some potential positives not immediately visible on the SPX chart. As cited earlier, the U.S. dollar and Treasury yields have shown signs of topping. (Crude oil is also sneaking lower, a potential deflationary stocking stuffer for the holidays.) The countertrend VIX has been unable to bounce.
One last factoid emerged from the American Association of Individual Investors (AAII). Its latest weekly poll showed that 33.5 percent of respondents were “bullish” toward the broader market -- its highest reading of 2022. Are spirits finally starting to lift after nearly a year of deep pessimism?
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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