Home Tools Equities Watchlist: S&P 500 Index Flashing More Bearish Signals

Equities Watchlist: S&P 500 Index Flashing More Bearish Signals


Are we about to see another leg lower for U.S. equities?

I’m seeing a bearish chart pattern and a bunch of inflection points holding on the S&P 500 index.

S&P 500 Index (SPX500) 4-hour

S&P 500 Index (SPX500) Daily Chart

I know we’ve looked at this confluence of upside barriers on the long-term time frame of the S&P 500 index, but it wouldn’t hurt to have a quick refresh!

As you can see from the daily chart above, the stock index is hitting a roadblock at the descending trend line and former support region. This happens to coincide with the 61.8% Fib and the 200 SMA, too!

The reason I’m paying closer attention to this textbook trend setup again is that a short-term head and shoulders pattern just formed.

In fact, the index already broke below the neckline of the bearish formation to confirm that another selloff is in the works.

Technical indicators are also in agreement, as the 100 SMA is below the 200 SMA to reflect downside momentum. The gap between the moving averages is even widening to show strengthening bearish vibes.

Stochastic is also heading south, so the equity index might keep following suit. Just be mindful that the oscillator is approaching oversold levels to indicate exhaustion among sellers soon.

If bearish pressure picks up, I wouldn’t be surprised to see the S&P 500 index drop back down to the swing low around 3,650 or lower.

Top-tier catalysts to keep tabs on include the U.S. non-farm payrolls report, as well as the leading jobs indicators lined up throughout the week.

Do you think U.S. equities will return to bear market territory soon?

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