S&P 500 Bears Pause As Bulls Stand Firm – 4,200 Marks A Critical Battle Line

Monday witnessed a session of modest gains for the S&P 500 index, edging up by 0.4% at the close, and breaking a four-session streak in the red.

The S&P 500 index is emerging from its most challenging week since early March 2023, ranking as the second-worst of week of the year, after experiencing a 2.9% decline.

The price action on Monday remained within a relatively narrow range, with the index fluctuating between a low of 4,302 and an intraday high of 4,336 points.

Among the top 10 components by weight in the S&P 500 index, tracked by the SPDR S&P 500 ETF Trust SPY, nine stocks recorded gains during the session, with Microsoft Corp. MSFT being the sole exception. The most substantial boost to the broader market’s daily performance came from Amazon.com Inc. AMZN, which saw a 1.6% increase during the day.

However, the bullish sentiment was somewhat restrained by a session marked by a surge in Treasury yields. The 10-year yield surpassed the 4.5% threshold, while the 30-year yield climbed above 4.6%, both reaching their highest levels in over a decade.

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S&P 500 Daily Chart Analysis

Since its peak in July, the S&P 500 has experienced a 6% decline, with September currently reflecting a 4% drop.

A significant focal point emerges in the form of Fibonacci retracement analysis applied to the S&P 500’s range from its 2023 high to low. This analysis designates 4,200 as a critical level to monitor, one that could signal a major trend reversal for the broader market.

Notably, this level aligns precisely with a 50% retracement of the aforementioned range. Should the S&P 500 breach this threshold, it would effectively wipe out all the gains it has delivered since early June.

Adding to its significance, the 200-day moving average converges at this juncture. The S&P 500 has maintained a position above this moving average since March 2023, underscoring the pivotal nature of the 4,200 level.

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