Weekly Update S&P 500

Hello everybody, welcome to this week’s analysis of the S&P 500. I’m writing this shortly before the New York open, and we are looking here at the 4-hour chart. So far this week, the S&P 500 has gained around 0.3%.

Looking at the 4-hour chart, you can see this week’s price action. After the very strong rally on Friday, we had a decline on Monday and late Tuesday, followed by a rally into the end of the week. There was also some volatility on Wednesday because of NVIDIA’s earnings. The company delivered strong results, surpassing Wall Street’s expectations, though it fell a little short in data center revenue.

On the chart, you can see the black trend lines outlining a rising wedge formation since the low at the beginning of August. Prices have been compressing within this pattern since then. You can clearly see how price reacted to the black trend lines of this rising wedge. Eventually, this pattern will break, and as always with such formations, the question is whether it breaks to the upside or the downside.

You can also see on the chart, marked with a red circle, that the S&P 500 was rejected at the top of this rising wedge pattern earlier this week. Since then, it has pulled back slightly and is now retesting the support zone around 6,480.

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New Trend Channel Emerges After Break of Old One

Looking at the daily chart, you can see the same support zone around 6,480. I described this level in last week’s report as a resistance zone, and over the last couple of days, it played exactly that role. The S&P 500 was not able to break above it — until Thursday, when a strong green candle finally pushed through. With that move, the zone switched from resistance to support. We are retesting this support zone right now, and we will see if it holds. For short-term price action, this support zone is definitely important.

We also have a trend channel on the daily chart defined by grey, green, and red shaded areas as trend lines. I mentioned this last week as well. This is a new trend channel that formed after the old one broke to the downside. It’s the same one I was talking about last week on the 4-hour chart, but now we’re looking at it on the daily. The slope of this channel is not as steep as the old one, and it’s working very well. You can see this especially on the green shaded area, which has acted as support on the downside, as well as on the red and grey shaded areas. Right now, the index has been rejected from the grey shaded area in the middle of this channel.

So for now, this is the framework we use to view the trend of the S&P 500. Generally speaking, the market is still very overbought on a longer-term scale — not necessarily on the daily chart. This could mean prices are ready for another push higher in the short term.

Eventually, we do expect this trend channel to break to the downside, leading to a bigger correction — maybe around 5 to 10%, possibly more. But for now, the trend is still very strong to the upside, and we have to respect that.

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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