Weekly Update S&P 500

Welcome to our weekly S&P 500 analysis. This week, the market saw a significant decline, with the index losing 2%. Last week, we anticipated another test of the key 6,000-point psychological level, and that’s precisely what happened earlier this week. The S&P 500 attempted to break above this barrier on Monday and Tuesday, only to face sharp rejection. A sharp drop followed on Tuesday, continuing throughout the week, and another major drop was seen on Friday. The index now sits 2% lower for the week and has returned to its previous lows from earlier weeks.

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Sharp Rejection from Key Resistance

The S&P 500 took a dramatic dive this week, starting with a sharp rejection at the red resistance zone—an area we highlighted in last week’s article. Tuesday’s massive down candle triggered an extended drop, and now the index sits right at a key support zone visible in the green box on the chart. This area has provided reliable support over the past several weeks, and it’s being tested once again.

Looking at the daily chart, the broader correction that began in December has now taken shape as an orange downward-sloping trend channel. The S&P 500 currently rests on the lower boundary of this trend channel, which converges with the green support zone. This overlap increases the likelihood of a bounce from these levels in the next few sessions.

The technical setup suggests that the correction could be nearing its end. Historically, markets often reverse course when conditions appear most dire. That said, if the support at this level fails, further downside could be in store. If the green zone holds, this correction may transition into an upward move, possibly setting the stage for new highs.

For now, the combination of support factors provides a technical foundation for a rebound or bottom in the S&P 500. The next few sessions will be crucial in determining whether the market resumes its upward trajectory or continues downward.

For subscribers it is very important to follow our risk management measures that we provide with all our services to protect against losses in case support zones break

S&P 500: Seasonality Insights for Early 2025

Seasonality charts often provide helpful context for understanding market tendencies. Historically, the S&P 500 exhibits a choppy start to the year, with January and February experiencing turbulence that can extend into mid-March. This seasonal pattern suggests the potential for weakness in the coming weeks.

However, this type of analysis should always be approached cautiously. While seasonal trends indicate broad expectations, they cannot predict the future. Notably, last year saw significant deviations from typical patterns, with strength in the market that outpaced historical norms.

If seasonality holds true, this early choppiness might be followed by stabilization. Still, after the notable price increases seen in late 2024, investors should prepare for possible volatility and ensure proper risk management strategies are in place.

Ultimately, seasonal trends provide valuable context, but they must be considered alongside current market dynamics and technical analysis for a clearer picture. The S&P 500’s behavior during this critical time will reveal whether the seasonal weakness manifests or if the market defies expectations again.

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The world of finance is complex and includes many technical terms. For explanations of these terms, I recommend using the Investopedia dictionary.