Weekly Update S&P 500

Hello everybody, and welcome to this week’s analysis of the S&P 500. The index finished the week with a gain of 0.5%. Looking at the 4-hour chart, we can see that the week started with a small drop, followed by a strong recovery on Monday and Tuesday. Price moved up from the 6,900-point support zone and made another attempt to reach the 7,000-point level. That move ran into resistance, with a short-term top forming on Wednesday. From there, price declined into the end of the week and tested the 6,900-point support zone once again. For now, this level has held, resulting in another choppy, back-and-forth week that ultimately closed with a slight gain.

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Choppy Price Action Continues Between Key Technical Levels

Let’s first revisit the daily chart from last week. On that chart, we marked the low around the 6,800-point zone, which was also in confluence with the gray shaded area of the rising trend channel. When we switch to this week’s updated daily chart, we can see that this low did indeed hold. Price then moved higher but was rejected around the 7,000-point area, followed by a modest pullback.

Looking ahead to next week, I have marked the three most important resistance and support zones on the chart with horizontal lines. The key resistance on the upside is the 7,000-point zone. Just below current price, the 6,900-point area is the most important near-term support. If that level breaks, the next major support lies lower at the gray shaded area of the rising trend channel, which is currently in confluence with the strong 6,800-point support zone. These are the main levels to watch, and it will be interesting to see whether next week brings another volatile back-and-forth move between these zones or a more decisive break.

Risk Outlook

Now let’s look at our short-term risk indicator and the buy and sell scores. On the lower panel, the S&P 500 is shown in black, the sell score in red, and the buy score in green. The top-right panel shows a zoomed-in view, and the top-left panel displays the resulting buy and sell signals as green and red vertical lines.

This week, we had a rather unusual situation where both the buy score and the sell score increased at the same time. I marked this on the top-right chart. Normally, we see one score dominate while the other declines, and overlap usually only happens briefly and at low levels that do not trigger signals. This time, however, the overlap was strong enough to generate signals in quick succession. As you can see on the top-left chart, we had a sell signal last week, a buy signal earlier this week, and then another sell signal triggered with Friday’s close.

As a result of the latest sell signal, we are once again reducing position size. These adjustments are communicated through our free newsletter service, where you can subscribe if you want to receive these signals in real time. At the moment, the sell score is the stronger of the two signals. You can see on the top-right chart that the sell score has been steadily increasing, while the buy score has already peaked and is starting to decline. That said, this situation can change again next week.

Overall, the market environment remains challenging. We have effectively gone nowhere for about three months now, with prices moving up and down within a wide range since November. The market looks somewhat tired and range-bound, but at the same time, this long period of sideways consolidation could eventually resolve with another leg higher.

Finally, let’s take a look at the mid-term risk outlook. On the bottom chart, we are still in the gray zone, which indicates a low-risk environment. We have not yet moved into the white zone, which would signal very low risk. On the top panel, you can see the risk indicator itself, shown as a blue line. This indicator is inverted and is used to generate the red, gray, yellow, and white shaded zones on the lower chart. At the moment, there is not much change in this indicator, which reflects the overall sideways and indecisive market behavior.

We also have an article (Update: January 20, 2026) 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 2026

When we look at the seasonality of the S&P 500, the last quarter of 2025 did not line up very well with the typical seasonal pattern. That’s not a problem, though — seasonality should be seen more like a weather model. It gives us a possible direction the market could take, not a precise forecast.

We did see weakness in October, which actually matched the seasonal pattern, as seasonality often points to a softer October. However, we did not get the strong year-end rally that seasonality would normally suggest.

Looking ahead to the first quarter of 2026, the seasonal pattern points to potential weakness in January, followed by rising prices in February, with a possible peak during that month. After that, seasonality suggests renewed weakness into March to start the year. We’ll have to see whether the market follows this pattern.

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.

Track Market Risk with Our Dashboard

Our Market Dashboard provides a quick overview of the current market conditions and, more importantly, the associated risk. You can view a chart of one of our tools, the Risk Level Indicator, showing predicted risk from 1998 to 2025. If you are interested, you can visit our Dashboard site here.

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