S&P 500 Price Trend Flashes Warning Signals But This Expert Says 'Start Looking For A Buy Signal' After Last Week's Drawdown

The S&P 500 index jumped over 2% on Friday, after a fall into the correction zone on Thursday last week, whereas the Nasdaq continues to be in the correction territory. While technical analysis points toward bearish trends, this analyst says that investors can start looking for buy signals.

What Happened: As of Friday, the S&P 500 index was 8.27% down from its 52-week high, which followed a bounce from Thursday’s 10.18% drawdown. Similarly, Nasdaq 100 was 11.33% lower from its 52-week high as of Friday.

According to Benzinga Pro and Edge Rankings, the technical analysis of the exchange-traded fund tracking the S&P 500 index, SPDR S&P 500 ETF Trust SPY were flashing warning signals.

Despite that Jay Kaeppel, the senior market analyst at SentimenTrader via his Panic/Euphoria analysis model showed that the S&P 500’s decline was still not flashing a buy signal. However, from this point, investors could "Start looking for a buy signal".

According to the chart shared by him, when the Panic/Euphoria line falls below the Excessive Pessimism level, investors could expect a bounce back with an average of over 7% return after two months and 28% returns after a year. But, this follows a series of red dots representing that investors should take a backseat.

Hence, as his model shows the presence of only one red dot, Kaeppel doesn’t forecast a buy yet, but the start of a potentially emerging buy signal.

Is this a "Buy" signal? IMO, no.
Is this a "Start looking for a buy signal" signal? IMO, yes.
Doesn't mean it will come soon or that things can't get worse as the first "dot" rarely marks the exact bottom (only in 2018). Still, the numbers are what they are. @sentimentrader pic.twitter.com/6Xq1lk9kNj
— Jay Kaeppel (@jaykaeppel) March 14, 2025

Why It Matters: SPY fell below its 200-day moving average on Thursday after its longest-ever streak and its technical charts showed that it was below all its short and long-term moving averages. The MACD momentum indicator was negative 11.38, signaling a downtrend in the short-term and its relative strength index of 37.72 was in the neutral zone.

Similarly, the Edge Rankings showed that SPY had a poor price trend in short, medium, and long term, with a momentum ranking of 64.34 percentile.

Price Action: The SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Friday. The SPY advanced 2.07% to $562.81, and the QQQ also jumped 2.42% to $479.66, according to Benzinga Pro data.

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