S&P 500 Trying To Form Support: Will a Rally Above 6,000 Follow?

The S&P 500 Index appears to have found technical support along its ascending trendline, which dates back to August last year. This development could attract buyers looking to capitalise on a potential rebound above 6,000, with further upside towards 6,100. However, before assuming the index will continue its long-term bullish trend, there are key factors to consider.

Market Uncertainty: US Tariffs and Global Impact

One of the primary concerns for investors is the uncertainty surrounding US tariffs. While former President Donald Trump has already announced that tariffs on Mexico and Canada will begin on April 2nd, markets have had time to digest this news.

However, fresh concerns have emerged following reports that the US is planning to impose new tariffs on Europe, with speculation of a possible 25% rate. This could not only impact European markets but also create broader market volatility as investors adopt a more cautious approach amid fears of an escalating trade war.

Technical Indicators: What Do They Suggest?

From a technical standpoint, momentum indicators present mixed signals:

• The Stochastic Oscillator on the daily chart has entered oversold territory, a level from which previous rallies have emerged (highlighted by white ovals in the chart). However, past occurrences in December and January show that the index can still decline despite being in this zone.
• The MACD indicator continues to fall and has not yet reached oversold levels based on historical trends. This suggests potential downside pressure in the short term.

Key Takeaways for Investors and Traders

While technical indicators suggest a possible bounce, there are no guarantees. The index could experience further downside movement before finding a short-term bottom, particularly as investors await:

• Upcoming US economic data releases
• Further developments on trade tariffs

For traders, risk management remains crucial, and keeping an eye on macro factors alongside technical signals can provide better decision-making insights.