Analysing the S&P 500's recent volatility and potential bull trap. Our technical analysis covers key support and resistance levels, market breadth, and the impact of ongoing trade tensions.
Chart of the week: US S&P 500
Let us revisit the technical analysis chart of the S&P 500, a major US benchmark stock index that has witnessed heightened two-way volatile movements in the past two weeks due to trade tariffs woes.
We have featured the S&P 500 in our prior “Chart of the week – US S&P 500’s potential bearish breakdown below key 200-day moving average” published on 12 March.
Since our last analysis, the price actions of the US S&P 500 CFD Index (a proxy of the S&P 500 E-mini futures) have staged the expected bearish breakdown below its 200-day moving average, extending a decline of 21% from its current all-time high of 6,153 on 19 March to print a recent low of 4,812 on 7 April.
On Wednesday, 9 April, US President Trump announced a 90-day pause on the higher reciprocal tariff rates for countries that do not retaliate, except for China, where duties on Chinese imports were raised to 145%.
The U.S. stock market soared, and the S&P 500 posted a monster rally of 9.5%, its best single-day performance since 2008. However, several technical elements have suggested that Wednesday, 9 April’s swift up move may be a bull trap in the making.
Fig 1: US S&P 500 medium-term trend as of 11 Apr 2025 (Source: TradingView)
The daily RSI momentum indicator of the US S&P 500 CFD Index has printed a “lower high” below its 50 level on Thursday, 10 April, in connection with a bearish reaction candlestick seen below its downward sloping 20-day moving average that is acting as a key resistance at 5,545.
In addition, market breadth within the S&P 500 remains weak, offering little evidence of a potential medium-term bullish reversal despite the sharp rally on 9 April. As of Thursday, 10 April, only 10% of S&P 500 component stocks were trading above their respective 20-day moving averages, a continued decline that underscores the lack of broad-based participation in the rebound.
Watch the US S&P 500 CFD Index’s major support at 4,820, and a break with a daily close below it may trigger the start of another potential impulsive down move to expose the next medium-term supports at 4,520, and 4120.
On the other hand, a clearance above the 5,545 key medium-term pivotal resistance negates the bearish tone to see the major resistance coming in at 5,795 (also, the point of intersection between the 50-day and 200-day moving averages).
