Amid ongoing economic uncertainty, the S&P 500 is flashing early warning signs of a potential bear market cycle. After slipping below its 50-day moving average and closing beneath that level, the index is showing signs of weakening short-term momentum. As of the latest update, the S&P 500 is trading at 6,630.21, a 0.6% decline from the previous day.
Technical Indicators to Watch
According to analysis by TradingShot on TradingView, technical signals suggest that the current pullback could lead to a significant downturn. One of the most concerning indicators is the persistent bearish divergence forming on the weekly Relative Strength Index (RSI). Though the index has been reaching higher highs, the RSI has been trending lower since late October. This mirrors a pattern observed in mid-November 2021, which preceded the inflation-driven bear market of 2022.
In addition, the 100-day moving average is emerging as a critical support level. Historically, this trend line has played a pivotal role in sustaining bullish momentum. Should the index close below this level on a weekly basis, it could signal a broader structural breakdown. In such a scenario, analysts predict the S&P 500 could revisit its 200-week moving average, a long-term support zone last tested during the 2022 bear market.
Key Levels and Projections
If support levels continue to falter, projections estimate that the index could retrace to a range between 5,300 and 5,000. This aligns with the 200-week moving average, which has historically marked major accumulation zones during market corrections.
However, not all experts are bearish. A segment of Wall Street remains optimistic, with some analysts forecasting that the S&P 500 could still push toward the 7,000 mark in 2026. This divergence in sentiment underscores the importance of monitoring key levels and acting swiftly when opportunities arise.
Impact on Broader Markets
The bearish sentiment in the equities market seems to be spilling over into cryptocurrency as well. Bitcoin and other major cryptocurrencies are experiencing increased selling pressure, reflecting the cautious outlook among investors.
How to Prepare
For investors navigating this uncertain terrain, diversification and risk management should take center stage. Consider exploring investment platforms like eToro, which offers access to thousands of assets, including stocks, cryptocurrencies, and ETFs, with 0% commission on stock trading. With features like real-time trading alerts and the option to copy top-performing traders, eToro can be a valuable tool in volatile markets.
Whether you’re a seasoned investor or just starting your journey, staying informed and utilizing advanced platforms can help you make well-timed decisions as the markets evolve.
