The US 500 rallied 0.8% last week to close at 5666 and in doing so managed to lock in its first up week since early February. The bounce also brought some joy to those dip buyers that had to endure watching the index move into correction territory (10% drop from 6144 high) the previous week when it touched a 6-month low at 5505 on March 13th.
Looking forward, it is probably still way too early to say that the selling and rotation away from US stocks into other global indices is over, although what we can say is that traders have taken a pause for reflection ahead of what could be a volatile finish to the end of the first quarter of 2025. Afterall, sentiment towards stocks in the US 500, especially the technology sector, remains fragile.
In the week ahead traders are likely to be focused on the finer details of President Trump’s plan for reciprocal tariffs, which are due to hit all countries, including long-time US allies, on April 2nd. The breadth of these tariffs and the extent of retaliatory measures, particularly from China and the EU, are likely to have knock on implications for US economic growth, inflation and consumer confidence (see below), all of which are key factors that may impact future corporate earnings and the direction of the US 500 across the week.
Economic Data:
Monday: 1345 GMT US Preliminary PMI Surveys
Tuesday: 1400 GMT US Consumer Confidence
Friday: 1230 GMT US PCE Index (Fed’s preferred inflation gauge)
Solid Footing:
The US 500 has opened the week on a more solid footing after a weekend report on Bloomberg suggested President Trump’s wave of tariffs are to be more targeted than the all-out assault he has touted on social media over the last few weeks.
However, this is yet to be confirmed, and while not the worst-case scenario, it would still be an escalation of the current trade wars and may still result in retaliatory measures from those countries that are hit the hardest. It could also mean traders need to be on Trump social media watch again in the early part of this week.
Technical Update: A Question of Fibonacci Retracements
The US 500 index encountered an aggressive sell-off of 10.4% from the February 2025 all-time high at 6144 to its March low of 5505, from which attempts to bounce have materialised.
This low was important from a technical perspective because the sell off tested a possible support level, marked by a Fibonacci retracement. In the case of the US 500 index, it was the 50% level of the April 2024 to February 2025 advance which stands at 5533 (see chart above).
Using Fibonacci Retracements:
Fibonacci retracements are useful as they can highlight potential support levels when any price weakness is seen and potential resistance levels when any price strength is seen.
Closing breaks below retracement support or above retracement resistance can suggest the possibility of a more extended price move in the direction of the break.
We recently published a report on how to use Fibonacci retracements in greater detail, so please take a look at our timeline to read this.
Are Fibonacci Retracement Levels Offering Any Insight into Recent US 500 Index Moves?
Having already rallied following tests of the 5533 retracement level, this has been confirmed as a support focus moving forward. While closing breaks are not a guarantee of further price declines, with much still dependent on future price trends and sentiment across the trading week, it may well be closes below this level that expose the potential for deeper declines.
If this were to happen, downside potential may then shift towards retracement support at the 61.8% level, which stands at 5389 as you can see on the chart above.
Fibonacci Resistance Focus:
We can also run Fibonacci retracements on the February to March phase of weakness to provide potential resistance levels to focus on in case there is an extension of the recent rally. The 38.2% retracement of the February to March decline stands at 5750 and this is a level that might need to be monitored.
If this 5750 level were to be broken on a closing basis, it may be possible to see a more extended phase of price strength which could could skew the focus for traders towards resistance at 5825, which is the higher 50% retracement level, may be even 5900, which is the 61.8% retracement.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Looking forward, it is probably still way too early to say that the selling and rotation away from US stocks into other global indices is over, although what we can say is that traders have taken a pause for reflection ahead of what could be a volatile finish to the end of the first quarter of 2025. Afterall, sentiment towards stocks in the US 500, especially the technology sector, remains fragile.
In the week ahead traders are likely to be focused on the finer details of President Trump’s plan for reciprocal tariffs, which are due to hit all countries, including long-time US allies, on April 2nd. The breadth of these tariffs and the extent of retaliatory measures, particularly from China and the EU, are likely to have knock on implications for US economic growth, inflation and consumer confidence (see below), all of which are key factors that may impact future corporate earnings and the direction of the US 500 across the week.
Economic Data:
Monday: 1345 GMT US Preliminary PMI Surveys
Tuesday: 1400 GMT US Consumer Confidence
Friday: 1230 GMT US PCE Index (Fed’s preferred inflation gauge)
Solid Footing:
The US 500 has opened the week on a more solid footing after a weekend report on Bloomberg suggested President Trump’s wave of tariffs are to be more targeted than the all-out assault he has touted on social media over the last few weeks.
However, this is yet to be confirmed, and while not the worst-case scenario, it would still be an escalation of the current trade wars and may still result in retaliatory measures from those countries that are hit the hardest. It could also mean traders need to be on Trump social media watch again in the early part of this week.
Technical Update: A Question of Fibonacci Retracements
The US 500 index encountered an aggressive sell-off of 10.4% from the February 2025 all-time high at 6144 to its March low of 5505, from which attempts to bounce have materialised.
This low was important from a technical perspective because the sell off tested a possible support level, marked by a Fibonacci retracement. In the case of the US 500 index, it was the 50% level of the April 2024 to February 2025 advance which stands at 5533 (see chart above).
Using Fibonacci Retracements:
Fibonacci retracements are useful as they can highlight potential support levels when any price weakness is seen and potential resistance levels when any price strength is seen.
Closing breaks below retracement support or above retracement resistance can suggest the possibility of a more extended price move in the direction of the break.
We recently published a report on how to use Fibonacci retracements in greater detail, so please take a look at our timeline to read this.
Are Fibonacci Retracement Levels Offering Any Insight into Recent US 500 Index Moves?
Having already rallied following tests of the 5533 retracement level, this has been confirmed as a support focus moving forward. While closing breaks are not a guarantee of further price declines, with much still dependent on future price trends and sentiment across the trading week, it may well be closes below this level that expose the potential for deeper declines.
If this were to happen, downside potential may then shift towards retracement support at the 61.8% level, which stands at 5389 as you can see on the chart above.
Fibonacci Resistance Focus:
We can also run Fibonacci retracements on the February to March phase of weakness to provide potential resistance levels to focus on in case there is an extension of the recent rally. The 38.2% retracement of the February to March decline stands at 5750 and this is a level that might need to be monitored.
If this 5750 level were to be broken on a closing basis, it may be possible to see a more extended phase of price strength which could could skew the focus for traders towards resistance at 5825, which is the higher 50% retracement level, may be even 5900, which is the 61.8% retracement.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.