By Lawrence G. McMillan
The S&P 500 index remains locked in a bear market, as the pattern of lower highs and lower lows continues (blue lines on the accompanying SPX chart). In fact, there is an even steeper downtrend line that can be drawn from the early April highs.
The S&P /zigman2/quotes/210599714/realtime SPX +0.19% attempted another oversold rally over the past week, coming off the lows of June 16 and 17, but this rally – even more so than the one before it in late May – appears to have failed rather quickly. This time, SPX only made it back to the declining 20-day moving average before turning downward again. It had seemed possible that the rally would at least fill the remaining gap on the SPX chart (circled on the graph), but it did not.
Now the focus shifts toward support. There is a small gap just above 3700, and then there should be support at the June lows, near 3635. Below that, one needs to look at a longer-term chart to discern support, which is near 3500, then 3200.