SPX a bounce or reversal?The S&P remains in a broader uptrend that began in late October 2023, but this week we saw a test to that structure. Price dipped below this key uptrend line but quickly reclaimed it, finding support on this line as well as the weekly’s 20 EMA. In Friday’s trading session, we saw a high-volume reversal, which could signal a potential bounce. The bigger question remains: is this just a retest before breaking lower, or the start of a true bullish reversal?
Right now, I lean toward this being a bounce rather than a full reversal, meaning we could see another attempt to break down through the October trendline in the coming weeks. That said, trades to the upside may still be viable if the market follows through early next week. If price pops above the daily moving averages, I think we are likely see some choppy action as the market decides whether to resume the uptrend or roll over again.
Key Levels to Watch:
6,010 Short-term resistance. Price must reclaim this level to continue higher.
5,954 Right on the long-term uptrend area. Holding above this level keeps the reversal in play, but failure increases breakdown risk.
5,840 Breakdown level. A break below this would signal a deeper pullback, likely toward the weekly’s 50 SMA.
Potential Scenarios:
🔼 Bullish A hold above 5,954 and a move through 6,010 could lead to a push toward the recent highs. A strong reclaim of the daily moving averages would shift momentum higher.
🔻 Bearish A failure at 5954 or a rejection at the moving averages may confirm this as a retest before another leg down. A break below 5,773 would indicate weakness, and could lead to a deeper correction.
⚖️ Neutral If price moves above the MAs but lacks follow through, we could see chop between 5,840 - 6,010, signaling indecision.
I'll be watching this week to see if this reversal holds or if it was just a retest before a breakdown. If selling pressure builds, we could see the first meaningful correction in months.
