Weekly Update S&P 500

Hello everybody, welcome to this week’s analysis of the S&P 500. This week, the S&P 500 gained 0.3%, with a lot of volatility in between. Looking at the 4-hour chart, we can see that at the beginning of the week, Monday and Tuesday, the S&P 500 moved sideways. We mentioned last week that we should pay attention to the potential weakness signaled by the black trend lines and the two middle lines of this channel. We said that if the index broke below that area, it would be a sign of weakness — and that’s exactly what happened on Tuesday and Wednesday. I marked this with a red circle.

We also had the support zone around 6,410 points, which was important to the downside. On Wednesday, we saw a move below that zone. On Thursday, the S&P moved up and down sideways, and then on Friday came the Jackson Hole speech from Powell, where he hinted at possible rate cuts in September. That pushed the market sharply to the upside — you can see the big green candle here. Just before that rally, the price touched and tested the lower part of the black trend channel (the second red circle). It was a very nice test of the channel support, and then we bounced right back up to retest last week’s high, which is now resistance around 6,480, and also aligned with the middle black trend lines. So we can expect a small pullback here. Technically, it’s very clean behavior.

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Daily chart shows break below April trend channel

Now, looking at the daily chart, things get even more interesting. We have a trend channel defined by green, grey, and red shaded areas since the April low — this represents the midterm trend on the daily chart. On Tuesday, the decline pushed the S&P out of this channel to the downside. We broke the green shaded area (marked with a red circle). For the last couple of weeks, prices hovered along that green shaded area and managed to hold it, but now it has broken. We declined this week, tested the black trend line (as we saw on the 4-hour chart), and then surged higher on Friday.

Going forward, we can expect a retest of the green shaded area from below (the second red circle on the chart). At this point, we have conflicting signals:

• On one hand, we broke out of the April trend channel to the downside, which could mean more correction and downside ahead.
  
• On the other hand, the market is respecting a newer trend channel, defined by the black trend lines since mid-May. This channel is less steep and easier to contain prices.
  

For now, the expectation is that the market will follow this newer, less steep black trend channel, even though the old April channel has been broken. That also means the market may continue rising, but in a weaker, more flattened slope compared to the steep rally since April.

We are still making higher highs and higher lows, so the trend is intact. However, momentum has slowed, and this flattening is something to watch carefully going forward.

We also have an article on the broader S&P 500 outlook. From a big-picture perspective, the technicals on the weekly chart are less positive and suggest that another correction could be developing in the coming weeks.

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

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S&P 500: Seasonality Insights for 2025

So far this year, the seasonal pattern for the S&P 500 has played out pretty much as expected. The first few months brought some noticeable volatility, which lines up with what we usually see in the early part of the year. Historically, January and February tend to be choppy, and that turbulence can sometimes stretch into March — and that’s exactly what happened this year.

In April, we had a sharp correction, which doesn’t line up exactly with the seasonality pattern. However, it might have been the May or June weakness playing out early this year in April. Since April, we’ve seen a very strong rise into the summer, all the way to the end of July. That, on the other hand, aligns very well with the seasonality.

Now, of course, we are looking into August and September, which are typically weak months of the year. The setup of starting a downturn in August seems to be right on time when we look at seasonality — you can see how prices in August and September tend to have big swings up and down, with a lot of volatility. Therefore, August and September should be expected to bring some weakness.

We will keep an eye on this, and then, when we come into October, we reach the strongest phase of the year. October, November, and December typically bring the year to an end with very strong seasonality. We will see if this holds true this year as well.

Of course, this isn’t a guarantee — it’s more of a roadmap based on past patterns. Ultimately, seasonal trends provide valuable context, but they must be considered alongside current market dynamics and technical analysis for a clearer picture.

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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.