Weekly Update S&P 500

Welcome to this week’s analysis of the S&P 500. The index experienced wide swings up and down but ended the week posting a gain of 0.7%.

On the 4-hour chart, we can see how the S&P 500 had strong gains between Tuesday and Wednesday, followed by volatility after the FOMC meeting, where the Federal Reserve decided to cut interest rates by 25 basis points. After that announcement, the market became choppy and sold off into the end of the week.

From a technical perspective, we can see a rejection in the yellow zone around 6,900 points, followed by a move lower into the red zone near 6,800 points — an area that should now act as strong support. Prices tested that zone, marked by the red circle on the chart.

Additionally, we can draw a short-term rising trend channel on the 4-hour chart using the black trendlines. This channel has captured price action nicely in recent weeks. At Friday’s close, prices were testing the lower trendline of this channel, also marked by a red circle. If this support holds, some upward movement can be expected into next week.

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Price Rejected at Key Level Within the Broader Trend Structure

Looking at the daily chart, we again see the rejection near the 6,900-point yellow zone. We can also draw the broader trend channel — which extends all the way back to May — showing the familiar green, gray, and red shaded areas as trendlines. The S&P 500 dropped out of this longer-term channel on October 10th, during the sharp decline shown by the large red candle on the chart.

Since then, prices have recovered strongly. Interestingly, the recent rejection around 6,900 points (the red circle on the daily chart) aligns with the lower boundary of that former channel — the green shaded area. This suggests that price has now retested the broken trendline from below and was rejected there, forming a potentially bearish setup.

However, the 7,000-point level — a major psychological threshold — sits just above current levels. It wouldn’t be surprising to see the index test that round number before any larger correction occurs.

Putting it all together, we can expect the 6,800-point support zone to hold in the near term, potentially leading to one more push toward 7,000 before a deeper pullback. Given that the market remains significantly overbought on a longer-term basis, a larger correction in the range of 5–7% is still needed to reset conditions.

Short-Term Risk Outlook

Turning to our “sell and buy score” chart — we see the S&P 500 in black, the sell score in red, and the buy score in green, we can see some interesting developments. The red marks on the chart to the right highlight the recent strong sell score, which coincided with the market top and the drop that followed on October 10th.

After that decline, we received a green buy signal, which aligned nicely with the bottom of the correction. Now, on the right side of the chart, we can see sell scores starting to build up again. The red dotted lines mark where the next sell signal might occur, potentially coinciding with another local top.

The more important point here is that in October, we had a sell score close to 10 — an extremely strong sell signal. Interestingly, the resulting drop wasn’t very large. Normally, such a strong sell score would lead to a bigger correction. You can see this by looking back at the orange zones on the chart: previous instances of such high sell scores led to significant tops and declines of at least 7% or more.

This suggests that a larger drop is still looming over the market in the coming weeks. Historically, it sometimes takes a while after such high sell scores before the actual correction occurs. Given the S&P 500’s phenomenal rally since the April lows and how overextended we are at the moment, a larger pullback seems likely — the current levels simply can’t be sustained much longer without some form of correction.

We also have an article (Update: October 30, 2025) 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, however, we experienced a sharp correction. That move doesn’t align perfectly with the usual seasonal pattern, but it may have represented the weakness that typically shows up in May or June arriving a bit earlier than usual. From that April low, the market rallied strongly through the summer, continuing higher into late July — a period that generally aligns well with historical seasonality.

However, the typical seasonal soft spot in August and September didn’t really appear this year. Usually, those two months bring some volatility or a correction phase, but the S&P 500 instead continued to trade with strength, avoiding any meaningful pullback.

Looking ahead to the remainder of the year — October, November, and December — these months are historically the strongest period of the year for the S&P 500. But given that we’ve already seen such a strong summer rally and skipped the usual correction phase, it’s reasonable to expect that some of that weakness may still be due.

In other words, the correction that typically occurs in late summer might simply have been delayed rather than avoided altogether. That means we could see it emerge in October or November before the market resumes its usual year-end strength.

Seasonality isn’t a perfect roadmap — it rarely plays out exactly the same way each year. But it does offer useful context. Right now, it suggests that while the broader trend remains positive into year-end, a short-term correction could still unfold before the next strong push higher into December.

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.