Important S&P 500 – Support Levels

At the 06/17/22 bottom the S&P 500 (SPX) had declined 24%, this is second largest percentage  decline since the 2007 to 2009  bear market.  The largest percentage drop was the February to March 2020 crash of 35%. 

The 06/18/22 blog “Dow Jones Industrial Average  Long – Term Time Forecast”  implied that the early January 2022 peak in US stocks could be the turning point for a multi-year bear market.

If the SPX drop from January 2022 is not complete, where are the next  potential support levels?

Point & Figure (PF) charting and Fibonacci analysis reveal some intriguing clues.

The daily SPX – PF chart courtesy of StockCharts.com illustrates potential intermediate and major support zones.

PF support/resistance is determined by the number of  “X’s” and “O’s” columns.  The greater the number columns indicates the degree of potential strength.    

This PF chart uses the Average True Range (ATR) method and shows two potential support areas.  Each  has  rows  of seven  columns . The first in the SPX 2,650 to 2,830 area could be reached later in 2022, possibly October based on seasonal patterns for US stocks.

The second level in  the SPX 1,280 to 1,370 zone.  It could take several years  for the SPX to reach this level – possibly five – years.     

The monthly SPX chart courtesy of Trading View illustrates  an important Fibonacci retracement level.

It’s fascinating  that a Fibonacci .618 retracement of the 2009 to 2022 bull market  is  just above the March 2020 bottom at 2,191.  Fibonacci support/resistance levels act as magnets  and resistors, pulling  markets towards them and then stopping the movement.

Additionally, the March 2020 to January 2022  SPX rally moved up faster and farther than almost every US stock bull  market since the Dow Jones Industrial Average 1932 to 1937 bull market.  Only the Nasdaq 1998 to 2000 rally was stronger, and that was  because of the technology stock mania.  That movement was the blowoff stage of the much larger bull market that began in 1990.

The SPX March  2020 to January 2022  appears  to be the blowoff stage for the secular bull market  that began  in  March  2009.   Typically, blowoff moves  in markets and stocks will quickly retrace  back to their point of origin – in  this case  the SPX 2,200 area.

How fast is “quickly”?  It depends on the speed of the move up, which from March 2020  was 22 – months.  A  10 – month drop from January 2022 to October 2022  would be about half the time. 

If the bear move that began in January 2022 continues and does not find support in the PF zone of 2,650 to 2,830, its  possible it could reach the 2,200 area  before the end of the year.

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

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