S&P500

Current price 2541

The S&P 500 closed 15% above its weekly low of 2200. That’s a significant bounce and the low point is likely to generate buying interest in case prices move back towards it. The close at 2541 brings prices to -25% from its all-time high of 3390 and about 4% away from an uptrend seen since 2009. Trading at the border of significant levels is usually a setup for either a bull trap or a bear trap.

Both are best avoided. A trend will eventually appear and the market provides sufficient returns to investors who align themselves with the trend. In a bullish scenario: assuming the index manages to register a weekly close above 2650. The index is likely to face strong selling pressure in the area of 2850 and 2900 and in order to maintain the uptrend it needs to negotiate this level effectively. In a bearish scenario: if prices drift lower, there is likely to be support at 2200 and below that the index will see strong buying interest in the area of 1950 and 2040 (which were the low points between 2014 and 2016).

There is usually a period of consolidation after a sharp fall in prices. The S&P500 may bounce about a range and this could be used to make shifts in the portfolio.