The S&P 500 index is showing bearish momentum after falling below its 50- and 100-day moving averages in today’s trading session. Technical analysts have described the failure to hold these levels as an early warning sign that the market’s growth trend is shifting to defensive mode.
Geopolitical tensions in the Middle East continue to be the main driver of volatility, sending the VIX Index to a high above 35. This situation has forced traders to switch from fundamental analysis to technical charts to find support points to avoid larger losses.
The 6,591 level, which is the 200-day moving average, is now a critical focus as the last bastion of the long-term trend. If the index fails to hold at this level, analysts expect it to mark the end of the uptrend that has been ongoing since May last year.
Some strategists see the current drop as a “healthy correction” as long as the 200-day average line is not broken. For this group, this decline may create a short-term buying opportunity before the market stabilizes.
However, the S&P 500's failure to close above the 100-day moving average resistance on Tuesday reinforced the cautious sentiment. The market is now monitoring the range between 6,550 and 6,600 as a determinant of whether the stock market will enter a deeper bear market phase.
