S&P 500 has had a few strong weeks, but is now again facing resistance. Is the current recovery the start of a bigger rally or is it just a dead cat bounce?
Key Observations
Recent Breakdown
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The S&P 500 experienced a sharp selloff after the announcement of Trump’s renewed tariff policies, which rattled global markets.
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This drop came after a clear negative divergence on the RSI and MACD, where momentum weakened while prices made higher highs, which is a classic warning signal.
Current Recovery
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Price found a bottom below 4,950, just above long-term horizontal support and around the lower boundary of a broad rising channel (green).
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Strong bullish weekly candles have since emerged, bringing price back above 5,400, and now retesting the 21 and 34-week EMAs — a critical juncture.
Rising Channel Still Intact
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Despite the selloff, the long-term upward channel remains unbroken, meaning the longer term uptrend is preserved (for now).
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Bulls defended the lower channel line — this could be a bear trap if follow-through buying continues.
Bullish Scenario
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If price closes above both EMAs (~5,675), it would signal a return of short-term bullish momentum, with eyes on 5,770, 5,875, and eventually retesting the all-time high above 6,100.
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Confirmation from RSI climbing above 50 and MACD histogram flipping green would further strengthen the bull case.
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In this scenario, the drop may be viewed as a healthy correction within an uptrend.
Bearish Scenario
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If the price fails to reclaim the 21/34 EMAs, this bounce may prove to be a retest of broken support.
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Price rejection at current levels would likely lead to another leg down toward 5,250 and 4,950, or even the lower bounds near 4,600.
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Continued MACD weakness and a downward-sloping RSI would support the idea that this is a bear market rally, not a trend reversal.
Momentum Indicators
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RSI sits at ~50 — right on the fence. A push above 55–60 would give bulls more confidence, while a rejection here could lead to more downside.
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MACD shows a rising histogram and curling signal lines — a potential early sign of recovery, but still in negative territory.
Conclusion
The S&P 500 is at a technical tipping point. Bulls must regain the EMAs and sustain momentum to re-enter the upper trend of the channel. Bears, however, may see this bounce as an opportunity to short into resistance if momentum fades.
Watch the 5,675–5,770 zone closely — the next few candles will likely determine whether the next major move is up or down.
