Weekly Update S&P 500

Welcome to this week’s analysis of the S&P 500. It was another very interesting week, with the index closing down 1.5%. Looking at the 4-hour chart, last week we discussed the short-term upward-rising trend channel, which is shown here with the black trend lines. On Friday, we saw a very clean test of the lower support line and the 6,800-point zone — that’s the first red circle on the chart.

After that, on Monday, there was a bit of upside movement, but when the price tested the 6,900 zone (the upper red circle), it failed there and reversed. From that point, we saw a sharp decline through most of the week. There was a small bounce on Wednesday, but the market continued to weaken on Thursday and Friday.

During the last trading hours on Friday, however, we saw a strong recovery — shown by the third red circle on the bottom — following a steep drop earlier that day. This was quite a strong move into the close. We can now also draw a new, downward-sloping trend channel using the black trend lines. The week’s price movements stayed mostly within this channel, except for the sharp drop on Friday, which briefly pushed below it before recovering strongly back inside.

From here, it’s not entirely clear how things will develop. It’s possible that Friday’s move — the sharp drop followed by a strong rebound — was a capitulation event. Typically, the last move in a correction is a very steep decline followed by a strong bounce; that pattern can mark the end of the correction and the beginning of a recovery. 

The next key level to watch is the 6,800-point zone, marked in red. This level is a stronger support/resistance area than the yellow zones. Since we’re currently trading just below it, two possible scenarios emerge: either the index moves up to 6,800 and fails again, or it manages to break through, retest it successfully, and continue higher. I’ve illustrated these potential paths with red arrows on the chart.

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Expanding Trend Channel Continues to Shape Market Direction

On the daily chart, we can see a very interesting pattern — an expanding range that has been developing since August. The two black trend lines form this expanding channel. The lower trend line has now caught five major lows, including this week’s strong recovery on Friday. The pattern so far has been a test of the lower trend line, followed by a test of the upper one, and then back again. This week’s rebound from the lower trend line raises the question: can we now move all the way up to test the upper boundary again?

I’ve marked this potential move with a red arrow on the chart. Such a move would bring the index close to the 7,000-point level — a psychologically important round number that often acts as a magnet for price action. Given the strong drop we just had and the subsequent recovery, a move toward 7,000 is certainly possible, provided that the 6,800 zone is broken.

Short-Term Risk Outlook

Finally, let’s look at the short-term buy and sell score chart. Here, the S&P 500 is shown in black, the buy score in green, and the sell score in red. Over the last two weeks, we had a nice short-term trade setup, with a buy signal followed by a sell signal — both marked by the vertical red lines. The red shaded area indicates where the sell score spiked, coinciding with the recent top.

Now, I expect that in the coming days or weeks, another buy signal could appear as the market moves toward a potential bottom. I’ve marked this expected signal with a “B” on the chart. Of course, whether that actually happens depends on how the next few sessions play out — we’ll be watching closely.

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.

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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.