The Election Was Support. Has it Become Resistance?Last year’s presidential election was a catalyst for stocks. Today’s idea considers its potentially shifting impact on sentiment.
The first pattern on today’s S&P 500 chart is the range between 5597 and 5783. Those prices are the low of November 4 and the high of November 5, the Monday and Tuesday of election week.
On January 13, SPX pulled back to find support at the top of the range. That bounce seemed to reflect ongoing optimism about the coming administration. (Inauguration was exactly a week later.)
The index remained above that zone through early March before sliding below it. Prices have now rebounded but appear to be stalling at the bottom of the price range. Does that show a newer anxiety about policy?
Next, Wilder’s relative strength index (RSI) made lower highs from early December -- despite SPX making incrementally higher highs. That kind of bearish divergence may be consistent with a longer-term trend fading.
Third, SPX is under its 200-day simple moving average (SMA). Staying here may confirm a break of its longer-term uptrend.
Finally, the 50-day SMA recently crossed below 100-day SMA. Both are falling. That may also suggest prices have stopped rising.
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