S&P 500: Can Bulls Push Above 4,375?

investing.com:

Last week, the S&P 500 rose to what is becoming a very important level of resistance at 4,375. It has significance from a few standpoints; it was a level of support and resistance going back to mid-August. It was level the index gapped below back below in late September and has been resistance since then.

It also has the 61.8% retracement level that dates back to the September 1 to the October 27 lows. Where the index goes, this week tells a lot about the structure of the move since mid-July and what it likely means going forward.

So there are two options here: the index needs to gap higher and take that resistance level out at 4,375 to 4,400, or it fails to do so, and we retrace some lower. All the index did this week was retrace the declines from the previous week in nearly the same manner in which it fell, which, by the way, was a retracement of the rally from the week before that.

This has happened on several occasions since the peak in 2022, and ultimately, the index has resolved in the direction of the larger trend, which in 2022 was lower and in 2023 had been higher until mid-July. If, indeed, this pattern persists and the trend now is lower, then the S&P 500 is likely to resolve lower and, based on previous examples, into a new low.

There was a clear cycle shift in July when the S&P 500 created a bearish engulfing pattern, just as a bullish engulfing pattern at the October 22 lows. If the market follows the typical pattern, then in the next week or so, the rally of last week will be erased. Again, this can be largely invalidated by the index being able to move firmly above 4,400, which has been the resistance zone, as noted above. That would probably set up a move higher back to 4,525.

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