S&P 500 rally breaks short-term downtrend, but heavy resistance ahead
Recent chart patterns are indicating some positive trends for the S & P 500 after a volatile month. The broad market index is headed toward nine straight days of gains as of midday Friday — its longest winning streak since November 2004. After Thursday's gains, the S & P 500 was trading above its 50-day moving average for the first time in more than two months, according to Bespoke Investment Group. "The just-ended streak of 47 trading days of closing below the 50-DMA wasn't extreme by any historical sense, but it was the longest streak of closes below that level since July 2022," the firm said. To be sure, Bespoke noted that the S & P 500 still has more upside resistance at the 200-day moving average as well as its mid-March high. In addition, historic trends since 2000 show the performance of the benchmark market index "wasn't particularly impressive" in periods after it ended prior periods of at least two months below the 50-DMA, Bespoke said. "Looking back over the longer term, though, since 1953 (the first full year of the five-day trading week in its current form), forward returns have been positive, although still not particularly impressive, especially in the periods looking out less than a year," the researcher said. Fairlead Strategies founder and managing partner Katie Stockton sees the next resistance level for the S & P 500 at 5,783, which was where it traded on Nov. 5, 2024, the day of the presidential election. Looking ahead, she notes that longer-term trends remain weak for the S & P 500 despite the short-term breakout that has reversed the index's losses since April 2, the day President Donald Trump's imposed high tariffs on imported goods. "We did see a breakdown that was more significant than the short-term breakout," said Stockton. "I call it a round trip — despite the recent bounce, the damage to the charts has been done."
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